VAT – Purchase and sale to EU country without importing / exporting

VAT – Purchase and sale to EU country without...

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Hello,

Can anyone help with the situation where a company registered in UK purchases good from Italy (from an Italian VAT registered entity) and then re-sells those goods to an Italian company.

At no point do the goods themselves leave Italy.

Thank you 

Replies (6)

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chips_at_mattersey
By Les Howard
03rd Sep 2012 16:05

Not an import or export

Just to be pedantic - such transactions are neither imports nor exports, since they are intra-EU movements!

You will need to provide evidence of movement nevertheless, so you can demonstrate that the goods did not enter the UK.

If the final recipient is VAT registered, then life is fairly easy, if not then more complicated.

If the final customer is VAT registered in Italy, the provisions of Notice 725, chapter 13 will apply. This means that the UK company does not need to account for acquisition tax, but the recipient company does.An EC Sales List entry is still required.

Do re-post if the final customer is not VAT registered in Italy, and I'll try to respond to that one!

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By User deleted
04th Sep 2012 16:20

Outside the scope of UK VAT

Hello, I just called the VAT office and explained the above that the UK company would be buying from an Italian customer and selling to an Italian customer without the goods ever leaving Italy. The VAT helpline told me that such transactions are completely outside the scope of UK VAT. That a company making such supplies would not even need to be register for UK VAT but may well need to register for "VAT" in Italy depending on turnover level.

Any comments. Is it as simple as that from a UK point of view?

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chips_at_mattersey
By Les Howard
04th Sep 2012 16:33

Cross border transactions

if HMRC give a telephone response, I would want a reference to their guidance; Notice and paragraph, at the very least.

If you rely on your recollection of a telecon, I don't think that is sufficient if they later say their recollection is different.

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By Chris Smail
04th Sep 2012 16:42

Agreed but I think that they are correct

Best check Italian Corporate taxes as well, as trade is taking place there. In fact why not do this from Italy?

Chris Smail  www.langer.co.uk 

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By User deleted
05th Sep 2012 16:55

Corp taxes

Hello, Thanks for reply. Yes I agree with you about the corp taxes. This wouldn't be allowed in UK so I don't think Italy would be fine with UK collecting their taxes. This VAT query was a final piece I needed in my defence - It's decided I'll be telling the client to give up on this hopeless idea. Thanks.

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By shaun king
06th Sep 2012 10:38

The UK VAT office is entirely correct in its advice that the supply is Outside the Scope of UK VAT as the Place of Supply is Italy as this will render the UK company liable to register for IVA. If the company doesn't register for IVA it will not be able to recover the IVA charged to it by the Italian supplier.

This is not an uncommon situation whereby a UK company buys and sells goods outside the UK without realising the need to register in another Member State. However, some Member States do not require a registration if the company does not have a business establishment there. However, this will then require a claim under the Mutual Recovery procedure.

I have had a couple of situations where the UK visiting officer has referred the need to register in another Member State to their tax authority requiring the UK company to go to great expense to resolve the situation.

Great care needs to be exercised in this area!! 

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