German VAT

German VAT

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My client is importing LCD monitors into the Uk from the far east. Paying import vat and duty at point of entry into UK. So far so good. But due to tight scheduling - his customer's customer has requested direct delivery into Germany for installation.

How does this work then? Will he pay German VAT and be able/not able to reclaim in UK? or does his customer (or customer's customer) pay the VAT in Germany and reclaim on the German VAT return??

Replies (7)

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Euan's picture
By Euan MacLennan
18th Feb 2010 15:24

Eh?

If the goods are being shipped direct to Germany, your client will not be importing them into the UK and so, will not be paying any UK import duty or VAT.

Someone is going to have to import them into Germany - whether it is your client, his customer, the end customer or more likely, a shipping agent acting for one of them - and pay German import duty and VAT.  I assume that your client is not registered in Germany for VAT.  If his customer is registered in Germany, he can instruct the shipping agent, pay and recover German VAT and then bill the end-customer with German VAT, which the latter will be able to reclaim.  Otherwise, the German end-customer can make the arrangements and pay and revover the German import VAT.

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By tracy.sammy23.freeserve.c
18th Feb 2010 17:06

I don't think...

- my clients customer isn't registered for vat in Germany - my client definately isn't

Maybe what I'm worried about is that he had factored into his profit margin 17.5% vat - but not sure what Germany's vat rate is - prob higher and he hasn't factored that in.

Am I making this more complicated than I need to - and I don't need to worry?

 

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Euan's picture
By Euan MacLennan
18th Feb 2010 17:32

Why would he ...

 ... factor the VAT into his profit margin?

Whatever a VAT-registered business pays in import VAT, it recovers as input VAT (assuming that it has the customs document and is not partially exempt).  It is the same in Germany as in the UK - the rate of VAT is irrelevant and VAT forms no part of the profit margin.

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By tracy.sammy23.freeserve.c
19th Feb 2010 07:56

He is on Flat rate scheme for Vat

so can't claim this input vat.

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By pipper01
19th Feb 2010 22:34

German VAT

German MwSt is 19%. If his customer isn't registered then he'll have to pay it on import into the EC. If his customer is registered, ask the clearing agent to clear the import on the customer's MwSt no and they'll be able to claim it back. 

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By Richard Willis
22nd Feb 2010 09:48

What VAT scheme HE is on is irrelevant!

It is how his German customer is taxed that matters.  Assuming that the DE customer is on a 'normal' accruals scheme the only problems will be: -

If the DE customer imports the goods they will know how much your client is paying for them (as import duty and VAT will be chargeable as ex country of export).

The rate of duty in DE may be more (or less, no prob.) than the UK and it is this that will affect your profit.

If your client is making supplies above the DE limit (? Nil for UK organisations) they should be registered in Germany.

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By tracy.sammy23.freeserve.c
23rd Feb 2010 10:28

His client is in the UK

His client's client is in Germany - he quoted and ordered equipment to be brought to the UK - for him to install his software, programme and tweak and then taken to Germany for installation.

Now, because his client has faffed around so much - they need the equipment to be shipped directly to Germany and for my client to do his bit - over in germany.

But he was stitched up (he was naive re import duty and vat) the last time and I think he's going to get stitched up again!

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