Is the EU VAT Threshold an annual one, or once it’s reached does a company have to charge local VAT for all future sales?

Question

Is the EU VAT Threshold an annual one, or once it’s reached does a company have to charge local VAT for all future sales?

This question was asked during our VAT Fundamentals webinar. You can watch the webinar at http://opentoexport.com/info/webinars/#VAT_fundamentals

Answer

There are a number of VAT thresholds, which can be found on the following link;

https://www.gov.uk/vat-registration-thresholds

If you are referring to distance selling, where a taxable person in one Member State supplies and delivers goods to a customer in another Member State who is not registered or liable to be registered for VAT, the threshold in the UK is £70,000.

If the annual value of your distance sales into the UK and the Isle of Man is less than the distance selling threshold you charge VAT at the rate that applies in your own country. You account for the VAT there too. If the value of your distance sales goes over the limit then you have to register for UK VAT. You then charge VAT on your VAT taxable sales at the UK rate instead of using your own country’s rate and account for it here.

Answer

If you are registered for VAT in the UK and make distance sales to customers in another EC Member State, you should charge UK VAT until:

•the value of your supplies in a calendar year exceed the distance selling threshold in that country, or

•you exercise the option described in paragraph 6.10 of VAT Notice 725: the single market.

Once the value of your distance sales exceeds this threshold, you will be liable to register and account for VAT in that Member State.

Each Member State is responsible for setting its own threshold, which is set in its own currency. The level of the threshold in a particular Member State can be found on the website mentioned at paragraph 2.11 or by contacting the VAT authority in the Member State concerned.

https://www.gov.uk/government/publications/vat-notice-725-the-single-market

HM Revenue & Customs

Customs International Trade & Excise

www.hmrc.gov.uk/contactus

Answer

There are a number of VAT thresholds, which can be found on the following link;

https://www.gov.uk/vat-registration-thresholds

If you are referring to distance selling, where a taxable person in one Member State supplies and delivers goods to a customer in another Member State who is not registered or liable to be registered for VAT, the threshold in the UK is £70,000.

If the annual value of your distance sales into the UK and the Isle of Man is less than the distance selling threshold you charge VAT at the rate that applies in your own country. You account for the VAT there too. If the value of your distance sales goes over the limit then you have to register for UK VAT. You then charge VAT on your VAT taxable sales at the UK rate instead of using your own country’s rate and account for it here.

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