VAT Invoice UK Company, ship direct to EU

[BCS1205]

Hi all,
We have a UK based customer that we drop ship for. On this occasion their customer is in the EU. I have been reading the regulations and find them rather ambiguous - shocker! If our customer is based in the UK, we should charge VAT. If the goods are being directly exported outside of UK, we should not charge VAT.

To VAT or not to VAT, that is the question? Does anyone have any inside info on this situation?

TIA
Bernie

 

[Deleted member 335660]

Hi all,
We have a UK based customer that we drop ship for. On this occasion their customer is in the EU. I have been reading the regulations and find them rather ambiguous - shocker! If our customer is based in the UK, we should charge VAT. If the goods are being directly exported outside of UK, we should not charge VAT.

To VAT or not to VAT, that is the question? Does anyone have any inside info on this situation?

TIA
Bernie

Hi Bernie,

I know it is the reverse as we are in Spain but this might be useful. This is from their help page so you should be able to see it.


https://help.printful.com/hc/en-us/articles/4402032573586-How-is-VAT-applied-to-EU-bound-orders-

What they are saying is there are two transactions, the drop shopper charging the seller and the seller charging their customer. They also bring in the fact as to where the seller is VAT registered.

If we drop ship an order within Spain they charge us Spanish VAT rate. If we supply customer in UK they will charge us UK vat rate. It is still confusing as there is also the suggestion that if we were VAT registered in UK they would charge us zero VAT. I can only assume that it would be because UK HMrC will be collecting it directly from me.

In all this they suggest you seek your own professional advice.

 

[Big4vatadvisor]

Hi Bernie

This can be complicated as your supply to the seller could either be subject to UK VAT at the 20% rate or seen as an export at the 0% rate - hence, I recommend you seek professional advice as the VAT treatment will be fact specific.

As a quick summary, from a UK VAT perspective, I expect there are two supplies happening:

1. Your supply of goods to the seller
2. The seller's supply of goods to their customer in the EU.

Where the seller takes ownership of the goods after they have left the UK and you are responsible for having the goods leave the UK, at a high level, I expect that it should possible for your supply (to the seller) to be a zero rated for UK VAT purposes as a "direct export" (subject to the normal evidence, timing rules etc).

However, where the seller takes ownership of the goods in UK it gets more complicated, as you may be required to charge UK VAT as if the goods are a domestic UK supply or potentially your supply could be treated as a zero rated "indirect export" if the seller immediately removes the goods from the UK. There are very specific rules regarding indirect exports and it is complicated.

More details on direct vs indirect exports can be found in HMRC's VAT manuals.

But ultimately, I recommend you take professional advice as the VAT treatment of your supply will be fact specific.

For reference, in my comments above, I have assumed you store the goods in the UK.

Hope that is helpful.