VAT in international trade

VAT is payable on most imports of goods and services with a value above £18 at the same rate as for UK products or services. You have to declare goods that you import to HM Revenue & Customs (HMRC) and pay any VAT and duty. Read about VAT and importing goods into the UK in Notice 702 on the HMRC website - Opens in a new window. You can also read about VAT on imports and foreign purchases on the HMRC website .

Exports of goods to destinations outside the European Union (EU) are eligible to be zero-rated for VAT. Read about VAT and exporting goods from the UK in Notice 703 on the HMRC website .

Goods dispatched to VAT registered businesses in other countries within the EU are also eligible to be zero-rated for VAT. Read about VAT goods traded in the EU in Notice 725 on the HMRC website .

Certain other supplies are exempt or zero-rated. See the page in this guide on VAT on dispatches and exports or find out which products are liable for VAT in our guide on products and services where you have to charge VAT.

There are several ways that you can make VAT work more efficiently for your business. The easiest way to register for VAT is online because it's free, secure and quicker than the paper system.

All businesses with an annual (VAT exclusive) turnover of £100,000 or more, and all new businesses registering for VAT, have to file their VAT returns online and pay VAT due electronically.

Enrol for VAT online on the HMRC website .

VAT and intra-EU acquisitions

If you acquire goods from within the EU you must enter the VAT details - or 'acquisition tax' - on your VAT return. You can reclaim the VAT as if the goods were supplied in the UK. No import duty is payable.

VAT and intra-European Community supply of services - cross-border VAT changes 2010

Rules determine where and when supplies of business to business (B2B) services in the EU are subject to VAT and change the way in which to reclaim VAT incurred in another EU country. Under the changes:

The place of supply rule when supplying intra-EC B2B services requires that tax be accounted for in the country in which the customer is established and not at the place where the supplier is established. The place of supply for business to consumer supplies of services is unchanged.

The time of supply - or tax point - for supplies subject to a reverse charge in another member state will depend on the nature of the service. For single supplies of services, the tax point will occur when the service is completed or when payment is made, whichever is the earlier. In the case of a continuous supply of services, the time of supply will be the end of each periodic billing or payment period, or when payment is made where this occurs before the end of the period. For continuous supplies without billing or payment periods it will be 31 December unless a payment is made earlier.

The method and deadline for reclaiming VAT incurred in another EU country require that you make a claim for a refund of such VAT, whether relating to goods or services, by electronic application on the HMRC website. HMRC will immediately forward your application to the relevant member state.

VAT on imports of goods from outside the EU

When you import goods from outside the EU, you have to pay the VAT - and report it on your VAT return - at the same rate as if the goods had been supplied in the UK. You can similarly reclaim the VAT.

Also, if no import duty has been paid, you need to calculate the value of the goods for import duty. For more information, see our guide on valuation, declarations and statements.

Deferring the payment of VAT and import duty

If you import regularly, you can delay paying VAT and import duty charges for an average of 30 days by opening a deferment account with HMRC. Instead of paying when you import the goods, you pay one lump sum by direct debit each month. This means that payments don't have to be handled for each transaction, so goods are often cleared more quickly. There is no charge for setting up a deferment account, but you are likely to incur bank charges when setting up the required bank guarantee. Find out about deferring VAT charges in our guide on deferring VAT and excise in international trade.

 

( liyy )02 Dec,2010

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