Export - Import between 2 EU countries for a UK Business - 0% Vat Query

[mailbagman]

Good day all

Just wanted to run this by any experts in the vat field. My company is a UK vat reg limited company. We trade UK and Eurppe.
We work with a manufacturer in the EU and import the goods to the UK.
We have some orders in process for a UK based customer we have but they want us to export the goods directly from the EU factory to another EU country, namely, ROI and Netherlands and zero vat the export/import to avoid import tax and duty which may apply if we bring the goods to us in the UK first and then export back out.
I would still require my factory ti invoice my company directly but they want to apply 21% vat as they are not exporting to the UK.
Surely if I provide my customers commercial invoice etc and they export directly to the other EU countries, my factory can still invoice my company directly and zero rate the vat as long as we have proof of export?

 

[lesvatadvice]

UK VAT cannot apply if goods do not enter or leave the UK.
However, you will need to determine your liability to register the country of receipt of the goods, Netherlands, from your post.

 

[Deleted member 351022]

Movements of goods within the EU are not imports or exports but sales and acquisitions. Therefore you will be aquiring and selling goods in the EU even if you don’t physically take possession of them .

Each EU country has its own peculiarities on VATso I would get some proper advice from a vat specialist but it is likely that this means you will need to register for VAT in the EU. There is a zero turnover threshold for VAT registration for non EU resident companies.

If you don’t have a EU VAT registration, the Irish manufacturer will have to charge you local VAT. You would still need to register for VAT in The Netherlands and report an intracommunity acquisition.

The situation described will almost certainly be considered an intracommunity sale from Ireland to The Netherlands . You as the UK middleman will need to register for VAT in Netherlands (as this is the country where the goods physically arrive) and report a VAT acquisition . The subsequent sale to the Dutch customer is subject to local Dutch VAT rules.

 

[mailbagman]

Hello

Thanks for your information but you have confused what the situation is. My manufacturer is in Lithuania and we shall refer to them as ( Lith ). My customer ( Cat ) own customers are in Dublin and Holland. My Company which we shall refer to as PPP is buying from Lith and selling to Cat here in the UK but Cat wants us to ship both orders directly from Lith to each of the two customer orders Holland and Ireland directly, thus avoid vat or any import duty as its EU too EU.

 

[lesvatadvice]

I don't think Customs Geek has confused the situation. You cannot assume the transactions will be free of either VAT or import duty, just because the goods remain within the EU. Each Member State has its own rules in relation to these issues. You have a UK VAT registered company but no EU registered company, so you would expect to be charged VAT and duty within at least one EU MS.
I recommend you seek paid-for advice on this transaction.

 

[mailbagman]

UK VAT cannot apply if goods do not enter or leave the UK.
However, you will need to determine your liability to register the country of receipt of the goods, Netherlands, from your post.

There would be no UK vat applied as the goods have been bought/sold within the EU, so my company would issue a zero rated invoice to my UK customer with no vat as we would then have proof of shipment and delivery within the EU.

 

[mailbagman]

I don't think Customs Geek has confused the situation. You cannot assume the transactions will be free of either VAT or import duty, just because the goods remain within the EU. Each Member State has its own rules in relation to these issues. You have a UK VAT registered company but no EU registered company, so you would expect to be charged VAT and duty within at least one EU MS.
I recommend you seek paid-for advice on this transaction.

Thank you

 

[Deleted member 351022]

There would be no UK vat applied as the goods have been bought/sold within the EU, so my company would issue a zero rated invoice to my UK customer with no vat as we would then have proof of shipment and delivery within the EU.

Yes your transaction would be outside the scope of UK VAT but not for EU VAT. I also understand your situation and the consequences for you on EU VAT requirements . Yes I incorrectly said an Irish manufacturer rather than a Lithuanian manufacturer ( which you didn’t mention) but the VAT principles are the same.
The intra EU transaction would however not be subject to customs controls or customs duty.

As far as the eu is concerned you are buying and selling in the EU so you must comply with intra EU VAT rules . The fact you are based outside the EU and do not take physical possession of the goods does not exempt you from complying with local VAT regulations . Legally you cannot sell something you do not own so the fact you are buying from a manufacturer in Lithuania but then selling to Irish a Dutch customers mean you are buying and selling goods in the EU .

A non EU based business can register for VAT as a non EU business.

The Lithuanian manufacturer must charge local VAT as they are neither exporting out of the EU or selling to another EU VAT registered business.

As I and lesvatadvice have said you need to get some professional advice.

 

[mailbagman]

Yes your transaction would be outside the scope of UK VAT but not for EU VAT. I also understand your situation and the consequences for you on EU VAT requirements . Yes I incorrectly said an Irish manufacturer rather than a Lithuanian manufacturer ( which you didn’t mention) but the VAT principles are the same.
The intra EU transaction would however not be subject to customs controls or customs duty.

As far as the eu is concerned you are buying and selling in the EU so you must comply with intra EU VAT rules . The fact you are based outside the EU and do not take physical possession of the goods does not exempt you from complying with local VAT regulations . Legally you cannot sell something you do not own so the fact you are buying from a manufacturer in Lithuania but then selling to Irish a Dutch customers mean you are buying and selling goods in the EU .

A non EU based business can register for VAT as a non EU business.

The Lithuanian manufacturer must charge local VAT as they are neither exporting out of the EU or selling to another EU VAT registered business.

As I and lesvatadvice have said you need to get some professional advice.

Thank you ever so much for you advise. I am now going to look into reg for Vat in the EU