Export VAT - What is Export VAT?
Export VAT is a tax on goods or services sent to customers within the European Union (EU).
The two sides of international trade are importing and exporting. Find out whether you should be paying Import VAT on any goods or services purchased from abroad.
If you sell to customers in the EU, you may need to pay Export VAT. Whether you should pay Export VAT, and how much you should pay, depends on factors such as:
- Whether you are selling goods or services
- The nature of the good or service
- Whether you sell to businesses or consumers
- How much you sell in individual countries.
If Export VAT is applicable, it should be added to the price of the goods and services being sold. When you send an invoice, you should clearly state how much VAT is being charged.
Where does Export VAT apply?
Generally speaking, Export VAT only applies within the 28 countries that are members of EU. This means that you can usually zero-rate any sales made outside of the EU, providing that you keep records of the export and comply with all other laws.
There are some countries and territories which have links with EU member states but are treated as non-EU countries for the purpose of Export VAT. These countries and territories include:
- The Channel Islands
- The Isle of Man
- The Canary Islands.
Export VAT for products
If you sell goods to another business based in another EU country, the rules on Export VAT depend on whether that business is VAT registered. You should not charge VAT if the business has a valid VAT number. If you are selling to a business which does not have a valid VAT number, you should charge VAT at the rate applicable in your home country.
If you send goods to a consumer 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 threshold in more than one country, you would need to register in each place.
Example of Export VAT for products
A UK business produces bikes, they have international customers 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 for services
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 rate of VAT that applies in your country.
The exceptions to these rules are telecommunications, broadcasting, and electronic services. If you sell any of these services to businesses in another EU country, you should charge VAT at their local rate. If you sell any of these services to consumers, you should not charge VAT as the customer is taxed in their own country.
Export VAT in Debitoor
Debitoor invoicing software is set up for intra-Community transactions to export goods and services. Plus, with multi-currency invoice templates and many different different language options, its easy to send invoices to international customers.