DEPARTURE OF GOODS FROM THE UK
EU rules for cross-border supplies and movements between Member States will no longer apply in the relations between Member States and the United Kingdom (e.g. no distance sales). Instead, an exportation will take place followed by an importation in the EU.
UK Business dealing with EU individuals should apply the following VAT rules when the goods are shipped from a stock held in the UK:
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VAT due on importation
VAT will be due at the importation in the EU, at the rate that applies to the supplies of the same goods within the EU. VAT will be payable to the Customs Authorities at the time of importation, unless the Member State of importation allows to enter import VAT in the periodical VAT return of the taxable person. The taxable amount is based on the value for customs purposes, but increased by
(a) taxes, duties, levies and other charges due outside the Member State of importation, and those due by reason of importation, excluding the VAT to be levied, and
(b) incidental expenses, such as commission, packing, transport and insurance costs, incurred up to the first place of destination within the territory of the Member State of importation as well as those resulting from transport to another place of destination within the EU, if that other place is known when the chargeable event occurs.
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Appointement of a VAT representative
Any UK business with a foreign VAT registration in the EU may now face the obligation to appoint a VAT representative in most of the 27 EU states. The tax representative undertakes to complete the formalities required of the person who as appointed him (making the statement of establishment, bookkeeping, signing turnover returns and paying the tax). The tax representative is legally responsible for meeting his obligations and legally liable for the tax owed. The tax representative has the same rights as all other taxable person.
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VAT due on subsequent sale to local customer
UK businesses are liable for the payment of local VAT on subsequent sale to final customers.
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Exception: Free VAT import for small consignments
Some EU countries introduced a free VAT import threshold (max 22 EUR) enabling UK businesses to avoid any VAT obligations in the EU.
DEPARTURE OF GOODS FROM THE EU
Distance selling in the E.U. occurs when goods are dispatched or transported for or on behalf of a supplier to one EU country to a person who is not registered for VAT (mainly private individuals). It includes mail order sales, phone or tele-sales or physical goods ordered over Internet (through a web shop of the company or via e-platform like Amazon).
UK Businesses selling goods to individuals across EU need to adopt the following VAT rules (distance sales rules):
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VAT due in the country where the stock is held
VAT is due in your country (country of dispatch of transport) provided that the threshold of the country of the customer is not reached;
VAT registration in the country where the stock is held is required accordingly. Any UK business with a foreign VAT registration in the EU may now face the obligation to appoint a VAT representative in most of the 27 EU states. The tax representative undertakes to complete the formalities required of the person who as appointed him (making the statement of establishment, book-keeping, signing turnover returns and paying the tax). The tax representative is legally responsible for meeting his obligations and legally liable for the tax owed. The tax representative has the same rights as all other taxable person.
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VAT due in the country of customer if threshold is reached
Where sales exceed the threshold in any particular EU country, your company must register and account for local VAT in that country. Under the EU VAT arrangement, Member States were required to adopt a distance sales threshold of either € 35,000 or € 100,000. If the threshold is not exceeded, your company may, nevertheless, opt to register and account for local VAT on its distance sales. Your company should monitor carefully its sales and verify when the threshold in one specific EU country is exceeded.
VAT registration in the country of customer is required accordingly. Any UK business with a foreign VAT registration in the EU may now face the obligation to appoint a VAT representative in most of the 27 EU states. The tax representative undertakes to complete the formalities required of the person who as appointed him (making the statement of establishment, book-keeping, signing turnover returns and paying the tax). The tax representative is legally responsible for meeting his obligations and legally liable for the tax owed. The tax representative has the same rights as all other taxable person.
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New rules applicables as from 1/7/2021
Please note that significant changes in the distance selling regime have been adopted and will be coming into force as from 1/7/2021.