VAT is a complex area of tax, especially as you have three rates to use: zero, reduced and standard, which is a rate of 20%.
As such, exporting goods is also a complex affair when it comes to VAT, so you may want to seek help from an accounting service in the UK in order to not fall foul of the regulations. However, you can also read on to find out some more:
What is exporting?
If you sell products or materials to other countries, this is known as exporting. If the goods are exported to an EU country, they are referred to as dispatches. Usually, you can treat items being sent to EU traders that are registered for VAT in their home country as zero rated, although you have to retain all the relevant documentation. This way, any VAT that may be due on the items will be paid in the customer’s country.
Documents you need to keep
If you are exporting to a firm that is registered for VAT in its own country, you have to include its VRN on the sales invoice. The prices charged have to be displayed in sterling and the relevant foreign currency on the invoice as well.
Within three months of selling the goods, you have to obtain the ‘evidence of removal’ paperwork, along with all invoices, client orders, bills obtained from the companies that dealt with the removal of the items, a list of the goods sold, and documents that prove that they reached their destination.
How to report exports to HMRC
You will record exports on your VAT return, including the rate charged. Once you have ticked box eight on your VAT return, you will be sent an EC Sales List. Exports above £260,000 to EU countries within one year must also be reported on the Intrastat Supplementary Declaration.
Selling to non-VAT registered traders
If exporting to someone in an EU nation who isn’t registered for VAT, you must charge it at the UK standard rate. There are circumstances where you will have to register for VAT in the customer’s country, so you may need professional advice. Make sure to report the sale to HMRC on your VAT return, but you won’t need to complete the EC Sales List. However, the Intrastat Supplementary Declaration must be filled out if sales exceed £260,000.
Exports outside EU
As VAT only applies to Europe, exports out of the EU’s borders are zero rated. However, documentation must be retained. There are many complex rules for VAT and exporting, so please contact us if you would like any more information.