If the value of your sales to that country is over this limit, you must register for VAT in that country, and charge their rate of VAT on sales to that country. You can find an up-to-date list of EU member states on the European Union website. A business must ensure that it charges and pays the right amount of VAT and duty. If you sell goods or services to someone who is not VAT-registered in an EU country, you must charge VAT in the normal way, just as you would for a UK customer. Contact the tax authority in that country to check. In order to treat the sales VAT free, the following … Home › Blog › Small business tips › A guide to VAT rules and rates on exports. Any goods sent outside of the EU must be declared on an export declaration to get your items through customs. How Does the VAT Rebate for Exports out of China work? However VAT looks to your business, it’s important to get it right to ensure that a) you’re complying with HM Revenue & Customs (HMRC) and local laws in the countries you operate in, and b) you’re able to reclaim the correct amount of tax on your VAT return. The Government has published new guidance for businesses which sets out the procedures for importing and exporting goods between Great Britain and the EU from 1 January 2021. 5. If you send goods to an EU country for repair or processing, you do not make a sale, so you do not need to charge VAT. Exports outside of the EU can be zero-rated, but you’ll need to provide documentation as proof that goods were transported. This is similar to a sales invoice and should include the following basic information: Keep copies of all commercial invoices for your own records. Where distance sales become more complex is when your sales reach the distance selling EU VAT threshold in a particular country. 6. Such … For goods that are exported from business to business outside the EU, VAT is not charged. What are … Excise duty is charged on fuel, alcohol and tobacco products. They are usually better off negotiating a price under the FOB incoterm and avoid worrying about the complex paperwork involved in getting a rebate on the VAT … You include the sale in your VAT Return for the period when the tax point takes place. If you use the National Export System, you’ll automatically get an electronic Goods Departed Message when the goods leave the UK, and this is acceptable official evidence. If goods are subject to excise duty, you pay this at the same time as you pay VAT and import duty. Such transactions are called removals. When exporting goods from the RSA to any export country, you have to distinguish between two types of exports, called direct and indirect export. The reverse charge was created as a way to simplify processing B2B transactions across borders. ‘Exports’ describes sales to a country outside the UK or EU. If you have any doubts, you should take a deposit that’s the same as the VAT that would be charged. If you deliver the goods (or arrange for them to be delivered), they’re treated as distance sales in the country you deliver them to, and you must register for VAT there no matter the value of the sales. In these cases, VAT is charged and due in the country of import and you don't need to declare any VAT as an exporter. When this happens, your supply takes place in the country where you install or assemble the items. Your EORI number is unique and valid throughout the UK and EU. The UK will become a ‘third country’, which means businesses will need to go through the same processes as other non-EU countries when selling to the EU. You’ll not have to account for VAT on these goods if all of the following apply: You might have a contract to supply goods that you’ve got to install or assemble on site. (If any VAT is due in the destination country, the recipient pays it there.) This post also assumes that you have basic knowledge of how VAT works. Tide, the Tide logo, the Swell, and Do less banking are trademarks and trade names of Tide Platform Limited, and may not be used or reproduced without consent of the owner. You can still zero rate the sale if: If goods have to be processed in the EU after leaving you but before they’re finally exported, the time limit is 6 months. Note that the local rate of VAT is the rate where the digital service is received, not where the customer is based. However, when exporting goods you will need to provide documentation as proof that the goods were transported outside the EU. In Ireland, the distance selling VAT threshold is €35,000. Find out whether you should pay Import VAT on goods or services purchased from abroad. Sections 35, 36, 37 and 50, and Schedule 2 of the Act, and Regulation 39 and 42 deal with exports. Every other type of sale is subject to VAT. However, to benefit from the zero-rating, you need to prove that goods have been exported within three months of sending them or receiving full payment. So if the roles are reversed and you are importing services from a B2B EU member state supplier to the UK and the reverse charge is applicable, your supplier does not need to charge you VAT and you must both credit the output tax you would have been charged and debit the input tax you would have paid in your VAT account—resulting in net £0. The best way to avoid making any mistakes is to know what the most common ones are so that you can steer clear of them. As a general rule, if your UK business sells services to other businesses outside of the UK but within the EU, you do not need to charge VAT but your customer (the buyer) does have to pay VAT in their own country using the reverse charge. In Germany, Helen sells €80,000 worth of t-shirts, but as the distance selling VAT threshold there is €100,000 she doesn’t have to register for VAT and can continue charging customers the UK rate of 20%. Declare details of your sales on your VAT return. Liability to VAT. A customs expert can work for you directly or indirectly to ensure your goods get through customs. services that require your intervention to be delivered), you need to charge customers the standard UK rate of VAT (currently 20%). For example, if you’re providing construction services, you won’t have to register for Intrastat. Brexit means... changes to the VAT rules for imports and exports. Export value-added tax (VAT) is a tax that is added to goods or services you sell to customers outside of the UK. The value of sales to each customer, along with their VAT numbers, need to be submitted to HMRC quarterly via an EC Sales List. VAT is a tax on goods used in the UK and EU, so if goods are exported outside the UK and EU, you do not charge VAT. If you use Royal Mail Parcel Force, they’ll give you a dispatch pack with accounting documents, a customs export declaration, and a receipt copy. As always, if you’re unsure about anything VAT related, seek advice from your accountant. You can submit a customs declaration yourself using the National Export System. The rate that you need to charge them depends on what type of service you offer. If you do not get this evidence in time, you’ll have to account for the VAT on your return. You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other laws. Under Part One, the supplying vendor will charge output tax at the standard rate of 14% on the supply of the movable goods to the qualifying purchaser. UAE - 800 82559 / Saudi - 800 2442559 / Bahrain - 800 12559 MENA VAT is a tax on goods used in the EU, so if goods are exported outside the EU, you do not charge VAT. VAT on the export of goods or services only applies within the EU. Some of the changes are covered in this post, but we’ll update the content as and when new rules are rolled out. You’ll need it when you supply information to customs authorities, for example when completing customs declarations. You may have to account for UK VAT unless you’re also registered for VAT in the EU country where you send them, in which case you can zero-rate them as long as you meet all the usual conditions. If you have customers abroad, you may need to charge VAT on the goods and services you … However, you’ll need third-party software. This means more admin and some confusion for businesses bringing low-cost goods into the UK. You can find this by looking up your product in, The customs procedure code (CPC). You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other laws. This makes exporting your goods quicker and easier. To learn more about these distinctions, read our guides to VAT exemption and who it applies to and everything you need to know about VAT partial exemption ✅. Take a look at our Business Current Account and get time back to focus on your business. Besides these rates there are several reduced rates, locally called Truncated Rates, for service sectors ranging from 1.5% to 10%. Certain controlled goods require an export licence or certificate. The EU repairer or processor will not charge you VAT for their work if you’re registered for VAT in the UK. In this post, you’ll learn how export VAT is charged on goods and services in the EU and the rest of the world, with checklists to ensure your exports run smoothly. You can use an online interactive tool to check if a VAT number for an EU country is valid. Exports at 0% VAT: How to get VAT Refunds on Exports in UAE. So instead of actually doing this, they need to declare both the output tax they would have charged you and the input tax you would have paid them in their VAT return under the same transaction, essentially cancelling each other out. You’ll need an EORI number even if you only occasionally export goods outside of the UK and EU. You’ll not have to report these sales on an ESL. VAT isn't charged on exports of goods to countries outside the EU. CPCs can be found on the, Proof of VAT or tax registration in your country of domiciliation, Proof of existence form the national company register, Custom declarations for goods exported to the EU (these currently only apply to exporting goods to the rest of the world). Eligible deposits with ClearBank are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS), the UK's deposit guarantee scheme. Top Tip: VAT exemption means that the goods or services you sell are outside of the scope of VAT and thus considered VAT exempt. 4 Ensure eligible for export VAT exemption. If you make sales or purchases from countries who are members of the EC, then certain VAT regulations will apply, in particular you may need to complete a quarterly EC Sales List. Zero rate means that the goods are still subject to VAT, but the rate you must charge is 0%. 1. Don’t include personal or financial information like your National Insurance number or credit card details. You should also keep proof of goods leaving the UK. This notice explains the conditions for zero rating VAT on an export of goods, that is, when the goods leave the EC. The process can also be complex. Charging VAT on goods you sell to customers in the EU depends on whether the customer is VAT-registered. If your sale is zero-rated, your invoice should include the customer’s VAT number. If the reverse charge does not apply, however, you may be liable to register for VAT in your customer’s local country. The customer only calls for them (‘call-off’) when the goods are needed, and until this happens, you’re still considered the owner of the goods. While each country has specific documents they’ll ask you to supply, in general, to register for VAT you’ll be asked for: 1. You’ll need to register for Intrastat and complete monthly Intrastat Supplementary Declarations (SDs) if your total sales to EU countries is more than £250,000 per year (you’ll also need to register if your total imports exceed £1.5 million). This is acceptable evidence that the goods have gone abroad. If your offer is digital (e.g. If you plan to export goods to countries outside the EU you must get an Economic Operator Registration and Identification number (EORI) to deal with EU Customs authorities. You can do this through the The National Export System for export declarations. If you need to pay VAT on exports, make sure you’re aware of whether you need to pay the UK rate or local rate of tax, as well as the relevant VAT thresholds for individual countries. When exporting goods from Germany to non-EU countries a VAT free treatment is possible. Export of goods can be of 2 types: Export of goods to non-GCC VAT implementing States; Export of goods to GCC VAT implementing States; It is important to identify whether the destination of goods exported is a GCC VAT implementing State or not. Tide is here to help small business owners and sole traders save time and money. Check that you’re applying the correct rate of VAT. Check whether you need to complete an Intrastat return. You can apply for your EORI number on the GOV.UK website. SARS has, subsequent to the introduction of VAT, issued a Practice Note detailing the documentation requirements and a Government Notice outlining the VAT Export … Partnerships Executive and small business accounting advocate. Therefore, HMRC recommends that you get someone to deal with customs declarations for you, such as a freight forwarder, custom agent or broker or fast parcel operator. You can find out more about removals in Notice 725: the singl… The Tide card is also issued by PPS pursuant to license by Mastercard International. If you supply excise goods (that is, goods that excise duty is payable on, such as alcohol or tobacco) to someone who is not registered for VAT in an EU country, the VAT due depends on whether you delivered them or your customer collected them. While this article is not about VAT on imports, if you do find yourself in this situation when filing your VAT return, as described in section 5.2 of the same notice, you simply include in the relevant boxes the: Top Tip: Filing your VAT return isn’t always straightforward. So you should record all export documentation and details of sales in the same way. We’ll also look at how export VAT will change after Brexit. Currently, the EU has 27 members: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Spain and Sweden. Note: ⚠️ The information in this post is correct up to 31 December 2020. There are two sides of international trade: importing and exporting. How much VAT you pay or whether you’re required to pay any at all depends on what you’re exporting and where you’re exporting to. Input VAT on Exports. This can be commercial or official evidence. Let’s break down the B2B and B2C scenarios in more detail. 2. A guide to VAT rules and rates on exports, Charging export VAT on services sold to EU countries, Charging export VAT on goods sold to EU countries, Essential checklists for exporting goods and services, how to avoid and rectify common VAT mistakes, everything you need to know about VAT partial exemption, New marking, labelling and marketing standards, exporting and declaring excise duty goods, how to choose an accountant for your small business, Amount of output tax in box 1 (VAT due on sales), Amount of input tax in box 4 (VAT reclaimed on purchases), Full value of the supply in box 6 (total value of sales), Full value of the supply in box 7 (total value of purchases), If you’re selling services to businesses, the reverse charge applies, If you’re selling services to consumers, VAT is charged at the UK rate for non-digital services and the local VAT rate for digital services, If you’re selling goods to VAT-registered customers, goods are zero-rated, If you’re selling goods to non-VAT registered customers, UK VAT is charged up to the point that sales exceed the distance selling EU VAT threshold, The commodity code of goods (also known as Tariff code, HS code or classification code). 4. If you’re holding call-off stocks for a customer but cannot meet these conditions, you must treat them as consignment stocks. This law was initially scheduled … You can zero rate goods you send by post to a customer who is VAT-registered in an EU country. You may have to send goods to an EU country so you can do a job there. If you have customers in several different countries, this would typically mean registering and filing VAT returns in every market you operate. We use cookies to collect information about how you use GOV.UK. You must also make sure the goods are exported, and you must get … This includes: chemicals; good; excise goods; livestock and foodstuffs. If … For further information visit fscs.org.uk. Whether importing or exporting, there are important VAT and duty rules and procedures. PPS holds an amount equivalent to the money in Tide current accounts in a safeguarding account which gives customers protection against PPS’ insolvency. Some EU countries have a simplified system for this but you’ll need to check with the VAT office in that country. Thankfully, HMRC’s VAT Mini One Stop Shop (VAT MOSS) scheme saves you the hassle and increased workload by allowing you to register and pay VAT on export sales to HMRC instead. If the evidence is unsatisfactory, then you may have to account for VAT on the sale. VAT on goods exported is normally charged at a rate of 14% (standard rated) or 0% (zero rated). In most cases, importers don’t need to worry about the way their supplier handles the VAT rebate. VAT on goods exported is normally charged at a rate of 15% (standard rate), or 0% (zero rated). Provide the customer with a VAT invoice and keep copies of these invoices. If you send goods outside the EU temporarily for exhibition, or sell goods on sale or return and they’re returned, then no sale has taken place and you do not have to pay VAT in the UK when the goods are returned. The word ‘pay’ is misleading, however, because the way it is set up means they actually do not need to pay any VAT on the purchase (we’ll untangle this in a moment). But if you’re providing construction services and supplying materials that you’re charging the customer for, you’ll need to register for Intrastat. The services provided by freight forwarding, shipping and clearing agents and port authorities are liable to VAT and providers of these services will be required to … 8. N.B. Sales to a country inside the EU are called ‘dispatches’ or ‘removals’. Your customer (the buyer) is now technically responsible for both charging output tax and paying input tax for this transaction. Export VAT is a tax on goods and services provided to customers outside of the UK. This only applies to goods, so if your business provides services you don’t need to worry about registering unless your business also supplies goods as part of a contract for services. With zero-rate, any sales will still need to be reported on your VAT Return. All UK registered traders have to send lists of their EU sales to HMRC. If you supply goods to a customer in an EU country who is not registered for VAT in that country and you’re responsible for delivery, this is a ‘distance sale’. As Helen sells €45,000 worth of t-shirts each year, she has to register for VAT in Ireland and charge customers the local rate of 23%. If your customer is registered for VAT in their local country, you can ‘zero-rate’ sales, providing you keep records of your export goods leaving the UK within three months of the sale and obtain their local VAT number. 2.Impact of VAT and VAT … Declarations are submitted electronically using the National Export System before your goods arrive at the port of export. However, to benefit from the zero-rating, you need to prove that goods have been exported within three months of sending them or receiving full payment. Find out if VAT is due when you sell, supply or transfer goods out of the UK, and about zero-rated goods, proof you must keep and which forms to fill in. VAT: how to work out your place of supply of services Understand the 'place of supply' and which country's VAT rules to use when supplying services abroad . The most common examples are mail order or internet sales to private individuals in an EU country. You (the supplier) must obtain and retain documentary evidence of the export. Your ‘evidence of removal’ will include a number of things like: You must keep evidence for 6 years. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale. An Economic Operator Registration and Identification (EORI) number prevents increased costs and delays when exporting goods to the rest of the world. August 31, 2018. If you’ve made EU sales where you’ve charged VAT, include the value of the sales in box 1 and box 6 on your return, and pay HMRC any VAT you’ve charged in the usual way. For example, if you run a small building company that is hired to work on a home restoration project by an ex-pat living in France, your invoice would need to include the total amount for your work + 20%. To learn more about the most common VAT return errors, read our guide to how to avoid and rectify common VAT mistakes . Lovewell Blake explain the issues. If you don’t have evidence of the export, you need to account for the full rate of VAT. You can refund the deposit if they give you the evidence that the goods have left the country within the time limit. Don’t worry we won’t send you spam or share your email address with anyone. Goods; The goods are zero rated. This card is for payments from Tide accounts. Beyond VAT, there are a number of changes on exporting that you’ll need to be aware of. If the customer collects them you can zero-rate the supply, unless they’re for private consumption, in which case they’re liable to UK VAT in the normal way. Standard VAT rate is 15%. Ultimately, the reverse charge is a complicated solution to a very simple reality: you do not need to charge VAT on export services and your customer does not need to pay VAT on import services bought from within the UK to EU countries and vice versa. If you sell services to consumers in the EU, you do need to add VAT to your invoices. As of 1 January 2021, UK businesses have to consider imports and exports to and from European Union (EU) countries as they do for countries outside the EU. telecommunications, broadcasting or online services), you need to charge customers at their local rate of VAT and provide invoices that comply with the country’s VAT rules. If you sell goods, check the EU VAT thresholds for each country in case you need to register for VAT and apply the local VAT rate on sales. 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