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International VAT fact sheet

Background

Value Added Tax (VAT) is applicable to EU member countries so any supplies made to countries outside of the EU are, therefore, outside of the scope of UK and EU VAT legislation and are not charged on the invoice.

How does this work in Crunch?

The Crunch system will automatically determine whether to add VAT or not based on the country information entered when adding your international client details into the system and whether you have a VAT number for EU clients.

The European Commission, Taxation and Customs Union provide an online VAT number validator, which you can use to validate your EU client's VAT registration number. Just to let you know, Crunch can’t be held responsible for the accuracy of data and services supplied by external websites.

Below shows you how you can determine the VAT you should apply when trading internationally on the Crunch system.

1)      Supplies of Goods

  • If the Export (known as Dispatches) is to an EU customer

Customer VAT registered in own country

Customer NOT VAT registered in own country

This supply for goods is Zero-rated.

This supply is UK standard rated

  • If it's an Export to a Non-EU customer

This supply for goods is Zero-rated.


2)  If you're providing services overseas, you need to consider where the route of supply is, generally you can apply these rules;

You supply services to a:

The place of supply is:

Business customer

The place where the customer belongs

Non-business customer

The place where your company is based

Once this has been determined you can apply the following;

If you are in the UK and the place of supply of your service is in the UK

If you are in the UK and the place of supply of your service is in another EU country

If the place of supply of your service is not in the EU

This supply of service is UK standard rated

This supply is outside the scope of VAT

This supply is outside the scope of VAT


3) Import (known as Acquisitions) from EU customer

You are VAT registered

You are NOT VAT registered

Pay VAT at the UK standard rate at the time when goods enter the UK

You pay the good gross and no VAT can be reclaimed as normal

Reclaim VAT on Next VAT return, this is called VAT neutral.

If you acquire goods in the UK from other EU countries worth £81,000 or more you may have to register for VAT in the UK.


4) Import from Non-EU customer

You are VAT registered

You are NOT VAT registered

Pay import VAT at UK standard rate at the point of entry into the UK, goods won’t be released until VAT is paid to authorities.

You still have to pay the import VAT but you will not be able to reclaim it.

Reclaim VAT on Next VAT return, this is called VAT neutral. You will need the import VAT certificate, form C79, to show that you have paid the import VAT.

 
 

5) Selling digital services within the EU

There are special rules in place from 1st January 2015 on the supplies of electronic services, please click here to find out more.
Last Updated: 25 Oct 2019 09:35AM BST
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