VAT: INTERNATIONAL TRADE IN GOOD
Stephen Pope, manager at Fiscal Solutions, tackled a vital but extremely complex topic in our latest webinar on VAT: International Trade in Goods.
There are different rules depending on whether the movement of goods is to another VAT registered business or to an organisation or consumer that is not VAT registered. There are also differences depending on whether the movement of goods stays within the EU or is imported from or exported to a country outside the EU.
There are exceptions to all these rules, but here are some of the key points that Stephen made:
- If you are making an EU sale to or an acquisition from a VAT registered organisation in the EU, and you are also a VAT registered organisation in the EU, the selling organisation charges a zero rate of VAT. You must have evidence that the other organisation has a valid VAT number from another country and evidence that the goods have left your own country within 3 months of purchase.
- If you are transferring your own goods to another country, you use the same rules, as long as you are also registered for VAT is an EU country other than your own. Essentially, this means you can send goods from your home country to another country ready to sell to consumers, and you don’t have to charge yourself VAT!
- Exports from the EU to a non-EU country are also zero rated.
- Imports into the EU from a non-EU country need to include VAT. The VAT should be charged not only on the cost of the goods, but all associated expenses, such as insurance, duties and so on. You can recover the import taxes as long as you fill in the right documents, which can vary from country to country.
- If you are selling goods to anyone without a VAT registration number, such as consumers or non-VAT registered organisations, this is called a ‘distance sale’. It is not a distance sale if your customer picks up the goods themselves in the country of origin – only if you supply the goods in another country.
- For distance selling, you have to pay VAT at the rate set in your own country until you reach the threshold set by the country you are selling goods to. Once you reach the threshold, you must register for VAT in the country where your customers are based and pay VAT at that country’s rate. Most EU countries have a threshold of 35k Euros, though there are notable exceptions such as the Netherlands which has a threshold of 100k Euros and the UK which has a threshold of £70k. You should check thresholds for each country because they can change.
To download the full webinar, and to listen to the specific questions that entrepreneurs asked Stephen, click here. We also have another webinar on VAT for digital services, where the rules are significantly different – click here to listen to it.