International trade and VAT: practical examples

To the UK

UK VAT rules apply.

To NI

UK VAT rules apply. 

To the EU:

• Export can be zero-rated from UK VAT’s perspective if a trader holds proof of export
• Import VAT may be due
• Each EU Member State has its own VAT rules which the exporter may need to be abide by
• VAT payment may be postponed upon importation - check the Member State’s specific requirements 
• VAT registration may be required, for example holding stock in an EU Member State - check the Member State’s specific requirements

To the Rest of the World (RoW):

• Export can be zero-rated from a UK VAT perspective if a trader holds proof of export
• Import VAT/Sales Tax may be due
• VAT payment may be postponed upon importation - check the Member State’s specific requirements  
• VAT registration may be required - check the country’s specific requirements

Importation into the UK:

• Import VAT may be due - importers have the option to use Postponed VAT Accounting (PVA) or to use a customs special procedure authorisation
• Payment may be postponed upon importation using PVA and does not require HMRC authorisation 
• Customs special procedures authorisations can be applied for - this will suspend the payment of import VAT and customs duties until the goods enter free circulation (UK) or are re-exported such as:
  • Customs warehousing
  • Inward processing

If the processed goods are sold to the UK, then UK VAT rules apply.

If the processed goods are sold back to the EU:

• Export can be zero-rated from a UK VAT perspective if a trader holds proof of export
• Import VAT may be due
• VAT payment may be postponed upon importation - check the Member State’s specific requirements 
• VAT registration may be required – either for B2B or B2C (distance selling) see below
• For sales to B2C, traders may consider registering for the EU Mini One Stop Shop schemes: 
  • Importer One Stop Shop (IOSS) for goods
  • Or One Stop Shop (OSS) for services

If the processed goods are sold to the RoW:

• Export can be zero-rated from a UK VAT perspective if a trader holds proof of export
• Import VAT/Sales Tax may be due
• VAT payment may be postponed upon importation - check the country's specific requirements
• VAT registration may be required - check the country's specific requirements

To the UK

• UK excise rules apply
• Excise goods may be moved within the UK under excise duty suspension through authorised warehouses

To Northern Ireland

• An excise duty charge arises when the goods enter Northern Ireland
• You can offset the excise duty already paid in Great Britain against this liability
• Further excise duty may become due on entry to Northern Ireland, if the EU excise duty rate is higher than that of the UK, or the goods are at risk of moving into the EU

To the EU

• Excise duties are due upon importation, unless the goods are moved under duty suspension between authorised warehouses

To the RoW

• Excise duties may be due upon importation - check the countries specific requirements

If selling to the UK, then UK VAT rules apply.

If the finished goods are sold to the EU:

• Export is zero-rated from a UK VAT perspective
• Import VAT is due which the online market place should collect and pay the relevant fiscal authority in the EU (deemed supplier) 
• VAT registration may be required – distance selling threshold – the online market place needs to be registered for VAT in an EU Member State
• Ecommerce platform guidance can be found on the European Commission One Stop Shop portal 

If the finished goods are sold to the RoW:

• Export is zero-rated from a UK VAT perspective
• Import VAT/Sales Tax may be due
• VAT payment may be postponed upon importation - check the country’s specific requirements 
• VAT registration may be required - check the country’s specific requirements 

To the UK:

UK VAT rules apply.

To the EU:

• Place of supply rules apply
• Supply is zero-rated from UK VAT’s perspective if the supply is located in the EU and the purchaser is a VAT registered business
• VAT registration may be required – either for B2B or B2C (distance selling)
• If the purchaser is not VAT registered then VAT is added to the invoice
• Traders supplying services to consumers in the EU may wish to register for the One Stop Shop non-union scheme VAT on digital services/MOSS: What services are covered?

To the RoW:

• Place of supply rules apply
• Supply is zero-rated from UK VAT’s perspective if the supply is located outside the UK and the purchaser is a VAT registered business - the business may need to consider using reverse charge to account for the VAT
• If the purchaser is not VAT registered then VAT is added to the invoice - this is normally applicable to B2C sales