Exporting goods? Make sure you account for VAT correctly and keep your customers happy!

There are two types of sales, business to business (B2B) and business to consumer (B2C) and the exports for each differ considerably.

One important thing for both types of export is that you have an EORI number which you can apply for here https://www.gov.uk/eori.

Business to Business

You should get evidence from your customer that they are a genuine business. A relevant VAT number from the customer’s Member State is satisfactory. For customers in non-EU countries or where the customer cannot supply a VAT number then they should provide other evidence of the business status.

Exports to a business outside the UK are zero rated for UK VAT provided the relevant evidence is obtained. Failure to provide this evidence may result in output tax due on the sales invoices.

The evidence required is as follows:

1.       Official Evidence – Goods departed message produced by the National Export System

2.       Commercial Evidence – Evidence of physical movement of goods e.g. couriers consignment note, certificate of shipment etc.

3.       Supplementary evidence – Business records e.g. customer order, contract, invoice from freight forwarder etc.

The customer in the Member State would pay the import duty when the goods enter the country, however they would also be able to reclaim this when completing their VAT return. If you are transferring goods from your UK company to your company established in a Member State then please be aware that you would need to register your EU company for VAT in the Member State in order to recover the import duty.

For goods exported to non-EU member states you would need to seek advice regarding the VAT rules in that country to ensure that you do not need to register there.

Business to Consumer

When exporting to non-businesses, you will likely need to register for VAT in a Member State or your customers will need to pay the import duty!

There are two types of sales to consumers, direct from your company i.e. your own website or via an Online Marketplace (OMP) such as Amazon.

For UK VAT purposes, all sales of goods would be zero rated.

Direct Sale of Goods under €150

You should sign up to the Import One Stop Shop (IOSS). This allows you to do one vat return for all sales to EU member states rather than registering in each individual country.

You would register using an intermediary registered in a member state (or your own company registered in a member state) and complete monthly returns. It would declare the import VAT due in all EU countries, the intermediary would submit the return and pay the VAT and you would need to pay this over to the intermediary. VAT would be charged by yourself at the point of sale using the VAT rate applicable in the customer’s country.

For ease of communication, we would recommend using an English speaking member state such as Republic of Ireland.

Direct Sale of Goods over €150

You cannot use the IOSS for goods over €150.

Goods over €150 would work similar to B2B sales, import duty would be payable when the goods arrive into the Member State. This can either be paid for by the customer on import or you can arrange with your courier that either you or the customer pay for this before the goods are shipped.

If you have a company registered in a Member State, you can register for VAT there and sign up to the One Stop Shop – this is only available for moving goods between EU member states. You would need to transfer your goods to the EU company and sell them on from there. The B2B rules would apply to the transfer and you would then account for VAT in the member state when making the supplies.

Sale of Goods via an OMP

The OMP such as Amazon is deemed to be the supplier of the goods and would account for the VAT as appropriate. Your company effectively sells the goods to the OMP which is zero rated.

It is important to make sure that the OMP will deal with the VAT or the B2C rules above would apply.

As always with any sales outside of EU member states you would need to seek advice in that specific country.

Since the UK’s exit from the EU exporting goods to Europe has become a lot more complicated with increased bureaucracy, so it is essential you get the right advice. If you need help on exporting goods abroad please contact Luke Anderson by email or phone 01634 731 390.

The content in this blog is correct as at 15th December 2022 See terms and conditions.