Export VAT - What is Export VAT?
Export VAT is a tax on goods and services provided to customers outside of the UK.
There are two sides of international trade: importing and exporting. Find out whether you should pay Import VAT on goods or services purchased from abroad.
If you have customers abroad, you may need to charge VAT on the goods and services you provide. Whether or not you should charge VAT depends on:
- Where your customer is based
- Whether your customer is VAT-registered
- Whether you sell goods or services
- How much you sell.
Export VAT and non-EU countries
As a general rule, export VAT only applies within the EU. This means that you can usually zero-rate any goods or services sold to customers outside of the EU, providing that you keep records of the export and comply with all other laws.
Be aware that if you send goods abroad, you need to make sure they are actually exported; this needs to be done within 3 months of sending the goods or receiving full payment, whichever date is sooner. If you do not get evidence that the sale can be zero-rated, you will need to account for the VAT yourself.
Export VAT for EU members
The rules for charging VAT on sales made within the EU is more complicated. Whether or not you should charge VAT depends on whether the customer is VAT-registered and whether you sell goods or services.
Charging VAT on services sold within the EU
If you sell services to businesses based in the EU, you would not normally charge VAT. Instead, your customer will pay VAT in their own country by following the reverse charge procedure.
When selling services to consumers in other EU countries, the customer should be charged the same rate of VAT that applies in the UK (i.e. 20%).
The exceptions to these rules are telecommunications, broadcasting, and electronic services, which are taxed in the customer’s country.
Charging VAT on goods exported within the EU
Whether you need to charge VAT goods sold to a customer within the EU depends on whether your customer is VAT-registered. If you charge VAT on goods sent to EU customers, this needs to be reported in your VAT Return.
If you sell goods to a customer that is registered for VAT in their own country (i.e. a VAT-registered business), you do not need to charge VAT on goods sent within the EU. However, you do need to ensure that:
- You get the customers VAT number, and include this on your sales invoice
- The goods are sent within three months
- You can prove that the goods have left the UK.
If you send goods to a customer that is not registered for VAT, you should charge VAT at the UK rate.
Registering for VAT abroad
If you regularly export goods to consumers (i.e. not businesses) in another EU country, you may need to register in that country and charge the local VAT rate. Whether or not you need to register in individual countries depends on whether your sales reach a certain threshold set by that specific country. If you reach the VAT threshold in more than one country, you would need to register in each place.
For example, a UK business produces bikes, they sell to consumers in both Denmark and Spain. In Denmark, the threshold is 280,000 kr. The UK business sells 300,000 kr worth of bikes each year so must register in Denmark and charge their Danish customers the local VAT rate of 25%. In Spain, the threshold is €35,000. The UK business only sells €33,000 worth of bikes so does not have to register for VAT in Spain and does not charge their Spanish customers any VAT.
Export VAT in Debitoor
Debitoor invoicing software is set up for intra-Community transactions, making it easy for you to export goods and services across Europe. Plus, with multi-currency invoice templates and many different different language options, you can tailor your invoices for international customers.