VAT on exports
Exporting to an EU country to someone who is
VAT-registered
- HMRC refers to exports to countries within the EU as
dispatches or removals.
- You zero-rate VAT on goods exported to VAT-registered people
within the EU. (If any VAT is due in the destination country, the
recipient pays it there.)
Keeping records if you're dispatching to someone VAT-registered
in their destination country:
- You have to show their VAT-registration number (including two
letter country code) on your sales invoice.
- Show prices on invoices in the foreign currency and in
sterling.
- You can use the exchange rates in newspapers.
- Or on the HMRC site.
- Or you can apply to HMRC in writing to use a different set of
rates (but don't start using them unless you've been
approved).
- You have to get the paperwork proving the goods have left the
UK, known as 'evidence of removal', within three months of the
sale.
- Keep any and all of the following:
- Customer orders
- Sales invoices
- Invoices from the companies who actually did the removal
(shipping, couriers, etc)
- List of what was packed
- All correspondence with the customer
- Relevant bank statements
- Paperwork proving the document arrived in the destination
country
- Documents should show:
- your business' name
- your customer's name
- what the goods are
- how much they're worth
- the destination address
- the method of transport (courier, post, etc)
- If you send goods by post: fill out a form C&E
132 or get a certificate of posting (or, if you use Royal Mail
Parcel Force, you'll get a pack with all the documents you
need).
- If you send goods by courier: your airways bill
number or customer dispatch pack receipt are sufficient as evidence
of removal.
- If a customer is planning on collecting the goods or if the
goods are going to be stored in the destination country for some
time until the customer is ready to collect them, check out the
relevant bits of information on HMRC's site
here.
- You have to keep all paperwork for six years.
Reporting your exports to HMRC:
- You must report your EU sales and the VAT charged to HMRC
using:
- Your VAT return (Boxes 6 and 8)
- Your EC Sales List (ESL) - you get sent this automatically
after ticking Box 8 of your VAT return (find out more in Resources,
below)
- If you sell more than £260,000 of goods to EU countries in a
year, you must also fill out the Intrastat Supplementary
Declaration (find out more in Resources, below)
Exporting to an EU country to someone who is not
VAT-registered
- This is called distance selling.
- You need to charge VAT at the same rates as you would if you
were selling in the UK.
- You follow the same process as if you were selling to someone
in the UK, including the VAT on the invoice.
- Put prices on the invoice in sterling and the foreign currency.
- You can use the exchange rates in newspapers.
- Or on the HMRC site.
- Or you can apply to HMRC in writing to use a different set of
rates (but don't start using them unless you've been
approved).
You only need to register for VAT in that country
if:
- You exceed a certain threshold of sales in one
country (different for each EU country). Find out the
threshold from HMRC.
- You are distance selling goods on which excise duty is
due (such as alcohol or tobacco) if you are delivering the
goods.
- If goods on which excise duty is due are for personal
use.
- (If the customer is collecting goods on which excise duty is
due, you don't need to register and you just zero rate them as
normal.)
If you have charged VAT on a sale, you need to report it
to HMRC by:
- Including the sale in Box 1 and Box 6 on your VAT return.
- You do not need to record it on a EC Sales List
(ESL).
- If you have sold more than £260,000 of goods to EU
countries in a year, you must fill out the Intrastat
Supplementary Declaration (find out more in Resources, below)
Special cases in the EU
If you are:
- Dispatching goods to another part of your own company
- Only moving the goods to the destination country
temporarily
- Dispatching and installing or assembling goods at the
destination country
- Sending goods to an EU country for repair or other
processing
You need to read about the different procedures and rules
involved in the relevant sections on this page of
HMRC's website.
Exporting to countries outside the EU
- HMRC uses the term 'exports' to mean exporting goods to
countries outside the EU.
- As VAT is only a Europe-wide thing, you zero-rate goods going
outside the EU.
But you have to make sure you have documentation to prove:
- The sale happened
- The shipment happened (if you don't get this, you'll have to
account for the goods on your VAT return)
- You also have to make sure the goods leave the EU within, in
most cases, three months (some items such as racehorses have longer
limits, call HMRC to check).
- If they're being transported by road through other EU
countries, you need to get documentation proving they have left the
EU (or else you can't zero-rate the sale).
If you are sending goods to the EU to be processed before being
sent on outside of the EU, if you are only moving goods outside the
EU temporarily, if you are a retailer, or if you are sending goods
to the Channel Islands, read HMRC's
advice on the rules for these special cases (at the bottom of
the page).
Recording exports to countries outside the EU:
- Put sales in Box 6 of your VAT return
- Keep copies of invoices and the documentation listed above
proving export
Resources
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