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UK or EU VAT?

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Hello,

If A. runs a UK registered business - an online shop - from France, using a GB EORI number to dispatch orders to the UK (from France). Do they need to be VAT registered in the UK (VAT registration was optional so far) or do they have to register with the French VAT as the goods are being kept in and sent from France? Most of their customer base is in the UK and they are not.

Also, as a UK business sending commercial goods to customers in the UK, do their customers still have to pay import tax upon receiving the goods?

I'm very confused on this, I'm hoping that someone on here will have the answer :)

Thanks!

Noémie.

Replies (5)

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chips_at_mattersey
By Les Howard
12th Apr 2021 19:54

I think (a) there is an obligation to register in the UK, (b) there is a benefit in registering in France, to recover input tax under equivalent of Sch1, para 10.

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Replying to leshoward:
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By Noemie
12th Apr 2021 20:43

"A person is “UK-established” if the person has a business establishment, or some other fixed establishment, in the United Kingdom in relation to a business carried on by the person"? - Thank you :)

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Jason Croke
By Jason Croke
13th Apr 2021 08:01

"A" is a UK company but not UK VAT registered, but does have a GB EORI number.

I don't think A has a requirement to register for UK VAT because it is a UK established company and VAT registration threshold is £85k of taxable sales.

The problem A has is twofold :-

1. Using its GB EORI number assigns the import VAT to A, and A cannot reclaim this VAT because A is not UK VAT registered, so A is incurring irrecoverable import VAT which it might be able to absorb if the margins are decent.

If you are using your GB EORI number then the customer is not liable for import VAT/duty, you are. What are the incoterms being used here? If using your GB EORI then that would assume it is DDP (Delivered Duty Paid) which puts the import VAT liability onto you.

Also, the UK company is making sales in the UK so would expect to see those sales to customers recorded as A's turnover/sales.

2. If the goods are in France at the time of sale and those goods are owned by the UK company, then there is a Nil threshold in France for non-established (not French) companies making sales, physically, from France. So the UK company "A" will need a French VAT registration, all the sales will be zero rated exports so no output tax to declare on French VAT return, you would need to speak to French accountant to see if there is an exemption from registration if you only make zero rated exports.

The non-established/Nil threshold rule hasn't changed and was the same pre-Brexit.

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Replying to Jason Croke:
Jason Croke
By Jason Croke
13th Apr 2021 09:21

Just reading back and just want to be clear, we don't know what values are involved and not much else like what is being sold, whether B2B or B2C, etc), but as "A" is the importer (because it uses it's GB EORI number), then if the value of sales made to UK customers is more than £85,0000 then "A" will be required to register for UK VAT.

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Replying to Jason Croke:
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By Noemie
13th Apr 2021 11:42

Thank you very much Jason, I'm still processing all the info - Whenever 'VAT' is mentioned my brain just freeze in panic, thank you for taking the time to explaining it all so clearly.

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