EU Exit: Frequently Asked Questions
Brexit has raised a lot of questions around VAT for businesses that import and export goods and services between the UK and EU.
To help shed some light and make the process easier for businesses, our VAT team have reviewed the most common queries they have received over the last couple of months.
These are not definitive answers but a guide to some of the bigger changes that businesses are having to face. Many businesses may need to consider how they currently operate and if they need to register for VAT elsewhere. If in doubt, always ask!
EU Exit FAQs
I sell goods to other businesses in the EU, can I zero-rate this sale?
Yes, you can zero-rate goods sold, B2B, provided you have evidence that the goods have left the UK. On arrival in the EU, your customer will have to pay import VAT on the goods but can recover this on their own VAT return.
I sold some goods to a (non-business) customer in the EU, they have been told by the courier they need to pay them more money before they can receive the goods.
Goods sold to consumers outside the UK can now be zero-rated as an export but once goods arrive in the EU, import VAT will be due and must be paid before the items will be allowed ‘in free circulation’ within the EU. There is no longer any import VAT relief for goods up to £135/€150 (across the EU, there is still relief for goods up to €22 until 1 July 2021, so someone has to pay this to the relevant authority and there are four choices:
The buyer can be the importer of record, and then they can accept the goods and pay any import VAT. Not a great customer experience and unlikely to lead to a lot of repeat business or
Ask the courier to pay any import VAT on your behalf; if you only send a few items to the EU, this may be the most expedient way to do this. Beware, many couriers charge a significant handling fee for this service (this may need a power of attorney) or
Register for VAT (as a non-resident company) in the EU countries you sell goods to. This makes for the smoothest sale process, the import VAT can be claimed on the EU VAT return and VAT on the sale can be declared then too. In some EU countries (Belgium, France, Italy, the Netherlands and Spain so far), provided you are registered in at least one EU country, they will treat this as a reverse charge, negating your need to declare output tax and you can reclaim the import VAT annually by making a 13th Directive claim or
Hold cleared goods in the EU and sell (distance selling) from there.
VAT should not be ‘charged’ twice (on sale price) and then again in order to collect the goods from a courier but, you may decide not to reduce the selling price if you choose option two, three or four because you, as the seller, still have to account for it somewhere.
My business wants to order some goods from another EU company, will I have to pay VAT?
Yes, you will have to pay import VAT if you are the importer of record but you can claim it back on your VAT return subject to the normal rules. Alternatively, you can use Postponed VAT Accounting and account for the VAT as a reverse charge on your VAT return. The EU business should zero-rate their supply to you as they will be exporting the goods from their own member state.
I thought I could reclaim import VAT using a C79, these are normally issued a month after the payment, this may affect my business’s cashflow. Is there anything else I can do?
Yes! You can use Postponed VAT Accounting (PVA), this enables you to both claim and pay the import VAT on your current VAT return – just make sure you let your customs agent know so they can complete the entry documents correctly.
I have an associated company in Italy and want them to supply one of my customers in France with some of their goods as I have none in the UK. Can I still zero-rate this sale?
(B2B) Not unless you register for VAT in Italy and then make an intra-community sale at the zero rate to the customer in France. It’s likely your associate will charge Italian VAT, so you need to register in Italy to recover input tax and make an onward zero-rated supply. Alternatively, you can register in France so your Italian associate can zero rate the sale to your French VAT number and you will in turn charge French VAT to the end customer.
(B2C) You can’t zero rate the sale as it will either be a distance sale from Italy or a domestic sale in France depending on which country you are registered.
This is not as straightforward as it once was and, for this type of scenario, please don’t hesitate to ask the VAT team for assistance.
I’m not VAT registered, based in the UK, and sell my goods on Amazon UK but, sometimes, my customers are in the EU, what happens then?
VAT will likely be due in the customer’s member state and you can check with your courier if you can get the goods delivered duty paid. Otherwise, your customer may have to pay additional charges to receive the goods or, alternatively, you may have a requirement to register in that country.
I am based outside the UK but sell my goods on Amazon UK, do I need to register for VAT?
One of two things will happen – either Amazon will be the importer of record and pay import VAT and sell in UK with VAT, or the seller is the importer of record and has to register in the UK to claim it back and sell to Amazon with VAT.
I have my own website and sell all over the world, the goods are all less than £30, do I need to make any changes to my business? I am not VAT registered in the UK.
Yes, there is no longer any minimum VAT threshold in the EU for non-EU sellers so there may be a requirement to register for VAT in those EU countries where you sell goods, see question one.
There are changes due after 1 July 2021 when you can register in only one EU country and submit a single VAT return for all sales to other EU countries – Non-Union Import One Stop Shop (IOSS).
There is still a low value limit in the EU of €22/£15 until 1 July so I would say, not yet but best to get ready for 1 July changes.
I provided some accountancy services to a Czech citizen, do I still need to charge VAT?
No. Supplies of intangible services, by accountants, solicitors and other professionals (except those relating to land) are outside the scope of UK VAT whether supplied to a business or consumer. If supplied to a business, the reverse charge applies.
Have some questions? For more information, get in touch with our VAT team.