Are we going to charge VAT to European Countries when we export after Brexit?

Question

Are we going to charge VAT to European Countries when we export?

This questions was asked as part of our webinar on ‘What exporters need to know about Brexit in 2017’. You can find a recording of the webinar here:

http://opentoexport.com/webinars/what-exporters-need-to-know-about-brexit-in-2017/

Answer

This question is difficult to answer accurately at this stage of the exit process, and would depend on whether you are selling to VAT registered businesses in the EU, or to private individuals.

In the worst case, ie a hard Brexit with no “different” treatment of EU sales, any EU transactions would probably be treated by HM RC in the same way as any current sales to clients outside the EU. If your sales originate in the UK you could zero-rate the transaction for VAT purposes provided that you hold proof that you have sold goods to a non-UK entity, and providing that you hold evidence that the goods have been removed from the UK (usually in the form of a copy export customs declaration or transport document proving physical despatch, or a screen print of a tracking record from a small parcel carrier).
On arrival at destination the goods would need to be cleared through customs, where they may be subject to import duty (depending on any negotiated settlement), and VAT would then be levied by the destination customs authority at the local rate.

If you are selling low value goods to private individuals, they may be exempted from duty or VAT charges if the goods value does not exceed the EU’s low value threshold – currently approximately €20. However the EU plans to remove this relief as the system is vulnerable to manipulation, and gives importers an unfair tax subsidy over local, EU-based providers.

Answer

This question is difficult to answer accurately at this stage of the exit process, and would depend on whether you are selling to VAT registered businesses in the EU, or to private individuals.

In the worst case, ie a hard Brexit with no “different” treatment of EU sales, any EU transactions would probably be treated by HM RC in the same way as any current sales to clients outside the EU. If your sales originate in the UK you could zero-rate the transaction for VAT purposes provided that you hold proof that you have sold goods to a non-UK entity, and providing that you hold evidence that the goods have been removed from the UK (usually in the form of a copy export customs declaration or transport document proving physical despatch, or a screen print of a tracking record from a small parcel carrier).
On arrival at destination the goods would need to be cleared through customs, where they may be subject to import duty (depending on any negotiated settlement), and VAT would then be levied by the destination customs authority at the local rate.

If you are selling low value goods to private individuals, they may be exempted from duty or VAT charges if the goods value does not exceed the EU’s low value threshold – currently approximately €20. However the EU plans to remove this relief as the system is vulnerable to manipulation, and gives importers an unfair tax subsidy over local, EU-based providers.

Answer

This question is difficult to answer accurately at this stage of the exit process, and would depend on whether you are selling to VAT registered businesses in the EU, or to private individuals.

In the worst case, ie a hard Brexit with no “different” treatment of EU sales, any EU transactions would probably be treated by HM RC in the same way as any current sales to clients outside the EU. If your sales originate in the UK you could zero-rate the transaction for VAT purposes provided that you hold proof that you have sold goods to a non-UK entity, and providing that you hold evidence that the goods have been removed from the UK (usually in the form of a copy export customs declaration or transport document proving physical despatch, or a screen print of a tracking record from a small parcel carrier).
On arrival at destination the goods would need to be cleared through customs, where they may be subject to import duty (depending on any negotiated settlement), and VAT would then be levied by the destination customs authority at the local rate.

If you are selling low value goods to private individuals, they may be exempted from duty or VAT charges if the goods value does not exceed the EU’s low value threshold – currently approximately €20. However the EU plans to remove this relief as the system is vulnerable to manipulation, and gives importers an unfair tax subsidy over local, EU-based providers.

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