VAT for Exporting to EU

[Greenslake]

I currently export to the EU using Royal Mail with DDU so the delivery duties and VAT is paid by the customer on import, we are UK VAT registered on the standard rate so the international sales are zero rated VAT wise, but what i was wondering is is there a point in which i have to register for VAT in the EU like there is in the UK with the £90,000 threhold? Or is it optional no matter the total of exports to the EU

I likely will use IOSS soon here to make it easier for our EU customers, but i just wanted to make sure im not doing anything wrong by just zero rating international sales and the customer paying duty/ VAT upon arrival in their country or if there are some threholds to register

Appreciate the help!

 

[Customs Geek]

Hi
Ni it doesn’t seem you are doing anything wrong with your current model.

If your customers are the importers and they are responsible for the import VAT liability then there is no obligation for a UK exporter to register for VAT in any EU country.
Even if you physically pay on your customers behalf it doesn’t change who is legally responsible for the tax which is the named importer.

Since Brexit the UK and EU VAT systems are entirely separate. You are correct to zero rate an export supply as the goods are not being sold to customers in the UK. Provided the VAT is paid at import there should be be no need to register for VAT in any EU country.
As you mention IOSS is optional for low value imports below £150

If however you hold stock or make taxable supplies in the EU you are obliged to register for VAT . There is a zero threshold for non EU businesses . Each EU country has is own VAT requirements.

 

[Greenslake]

Hi
Ni it doesn’t seem you are doing anything wrong with your current model.

If your customers are the importers and they are responsible for the import VAT liability then there is no obligation for a UK exporter to register for VAT in any EU country.
Even if you physically pay on your customers behalf it doesn’t change who is legally responsible for the tax which is the named importer.

Since Brexit the UK and EU VAT systems are entirely separate. You are correct to zero rate an export supply as the goods are not being sold to customers in the UK. Provided the VAT is paid at import there should be be no need to register for VAT in any EU country.
As you mention IOSS is optional for low value imports below £150

If however you hold stock or make taxable supplies in the EU you are obliged to register for VAT . There is a zero threshold for non EU businesses . Each EU country has is own VAT requirements.

Hey thank you for the reply it is much appreciated! So just to confirm there is no threshold for any country within the EU where i would need to register for VAT so can i always send using DDU/ DAP and zero rate the VAT on checkout if i wanted? Just want to be 100% sure i dont have to register if there was no requirements if i hit a certain amount like the UK is at 90K

Thank you again

 

[Customs Geek]

Hi
Yes there is still a certain amount of ( set at country level) where local EU businesses must register for VAT.
This does not however apply to non eu businesses so when I said there is no threshold I mean the requirement to register for VAT applies on the first taxable transaction in the EU. Ie set at €1. The key is to understand when you are making a taxable transaction in the EU which is typically when you hold stock or buy / sell within the EU.
If you sell DDU which is a carrier term on which party pays the import taxes then it’s unlikely you will be considered to be making taxable supplies in the EU.

The zero rate is uk vat and nothing at all to do with any EU countries VAT.

 

[LPB 123]

I currently export to the EU using Royal Mail with DDU so the delivery duties and VAT is paid by the customer on import, we are UK VAT registered on the standard rate so the international sales are zero rated VAT wise, but what i was wondering is is there a point in which i have to register for VAT in the EU like there is in the UK with the £90,000 threhold? Or is it optional no matter the total of exports to the EU

I likely will use IOSS soon here to make it easier for our EU customers, but i just wanted to make sure im not doing anything wrong by just zero rating international sales and the customer paying duty/ VAT upon arrival in their country or if there are some threholds to register

Appreciate the help!

Where in the EU do you export to most?

Royal Mail offer DDP shipping for 50p admin fee per shipment, which is a good step before going down the IOSS route.

They only offer it to some countries though so it depends where you export.

It takes the hassle out of customs for your customers and the admin fee would be far lower than what they have to pay the other side, which is often 10 euros plus in admin fees.

 

[Greenslake]

Hi
Yes there is still a certain amount of ( set at country level) where local EU businesses must register for VAT.
This does not however apply to non eu businesses so when I said there is no threshold I mean the requirement to register for VAT applies on the first taxable transaction in the EU. Ie set at €1. The key is to understand when you are making a taxable transaction in the EU which is typically when you hold stock or buy / sell within the EU.
If you sell DDU which is a carrier term on which party pays the import taxes then it’s unlikely you will be considered to be making taxable supplies in the EU.

The zero rate is uk vat and nothing at all to do with any EU countries VAT.

Hey perfect thank you so as it stand then i can continue to use DAP/DDU with Royal Mail and the customer would pay this upon import in that case which is good to know i'm not doing anything wrong there

I likely will get IOSS setup though as its a pain for customers to deal with the duty and VAT

I was speaking to someone else and they did say there was a registration requirement for Norway for goods less that 3000 NOK if the turnover exceeds 50,000 NOK, is that turnover for sales to Norway only or does that include overall business turnover? If its only for sales to Norway i wouldn't hit that requirement as i don't sell much to Norway to reach that at all

Where in the EU do you export to most?

Royal Mail offer DDP shipping for 50p admin fee per shipment, which is a good step before going down the IOSS route.

They only offer it to some countries though so it depends where you export.

It takes the hassle out of customs for your customers and the admin fee would be far lower than what they have to pay the other side, which is often 10 euros plus in admin fees.

Its mostly Germany, France, Netherlands, and there are a good few returns due to the customer not getting notified upon import sadly. Thats Royal Mail option does sound good though and i'll take a look at that appreciate it!

 

[DontAsk]

Its mostly Germany, France, Netherlands, and there are a good few returns due to the customer not getting notified upon import sadly. Thats Royal Mail option does sound good though and i'll take a look at that appreciate it!

You business model is similar to mine in this respect.

I get zero returns of DDU via Royal Mail so I wonder what you are doing wrong? Since covid I send all exports tracked and signed, maybe that makes a difference. I have found my customers are willing to pay.

On the other hand I have heard bad stories about DDP via Royal Mail with customers being charge VAT and fees regardless. I keep looking at Royal Mail (and other) solutions but always go back to sending DDU. Also be aware that it's not simply a 50p charge. You will need an extension to your e-commerce platform to calculate the correct duty and fees to be paid by the customer.

I recently managed to open a DHL account on (mostly) favourable terms. DHL Global Mail is cheaper than RM tracked/signed, even with tracking, for my parcels, but there does seem to be a delay in the system between UK collection and the DeutschePost hub from where it is sent onwards.