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VAT on Shipping product from Germany to France.

Purchase invoice with VAT from Germany, ship to France. Sales invoice to UK customer

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We're in the UK and have purchased goods form Germany which are being shipped directly to France. The german supplier has charged us VAT on their invoice. Our customer is UK based but the goods are being processed in France before eventually coming into the UK. I'm not sure whether I can re-claim the VAT from Germany using the EU directive website, or whether they should charge me. I'm also unsure if I should charge VAT to the customer, as the goods are being shipped directly from Germany to France. All parties are VAT registered in their countries of origin. Any advice appreciated

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Jason Croke
By Jason Croke
23rd Sep 2021 13:11

Is this a regular transaction (German>France>UK) or a one-off?

When the goods come to the UK who is the importer of those goods - you or the end customer? I presume the French processer is the one who ships the goods to UK.

Also, what is this "processing" that takes place in France. I am trying to see if it is a service (like polishing the goods) or if they add other bits to the goods and presumably the French are charging you just for their processing bit, so it looks like you buy goods in Germany, these are then shipped to France for some sort of processing, France charges you just for the processing and France ships the finished goods to UK.

The movement from France to UK should be zero rated on basis its a movement of goods/export from France into the UK....but subject to what the processing actually is.

It feels like you should be registered for VAT in Germany or in France as it looks like you are an intermediary sitting between UK customer and the EU based suppliers.

In terms of whether you charge UK VAT to the UK customer, that depends on who the importer of the goods into the UK will be (Incoterms), it will either be you or the end customer.

Have a read of these articles, I know there are several but its important to understand the impact that Brexit has on VAT and how it fundamentally changes the way goods are bought and sold between UK and EU, speak to your Accountants as they should be able to offer some guidance or refer you to a third-party advisor.
https://www.accountingweb.co.uk/content/brace-for-brexit

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Replying to Jason Croke:
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By amandammohr
23rd Sep 2021 15:15

Thanks for the answer and the link. I probably didn't describe the transactions properly. We are buying from Germany on behalf of a UK customer. The UK customer is having the goods shipped directly from Germany to France. Its steel products so they could be painting or marking in some way. As this process is between the customers own divisions I'm not sure. So Germany have invoiced us, we are invoicing a UK customer. But the goods aren't coming into the UK until they've had a secondary process undertaken, and this isn't our responsibility as we are invoicing for the unaltered product.

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Replying to amandammohr:
Jason Croke
By Jason Croke
24th Sep 2021 08:14

Thanks for the extra detail, so you buy the goods in Germany and simultaneously sell those goods to the UK customer. So you own the goods in Germany and that triggers a German VAT registration for you I believe.

The processing in France is nothing to do with you, on the basis you are not charging for that process, you appear to be just selling steel, facilitating the movement of your steel from Germany to France, with the processing in France a separate supply between the UK customer and the French supplier.

Who is responsible for shipping the finished product from France to UK? and just to confirm, your contract with the UK is to sell them steel only and the French processing and final movement is between France and customer.

Reason for asking is, who owns the steel at the time it goes to French processor? It could be that the movement from Germany to France is intra-EU/no VAT followed by an importation into the UK and if customer is the importer then they pay the duty/VAT, whereas if you are the importer then you'd have to pay the duty/VAT.

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Replying to Jason Croke:
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By amandammohr
24th Sep 2021 08:28

Hi, Our customer ships the product from France to the UK and yes, our contract is to sell them steel only. I believe the goods are being shipped to our customers French factory.
So it looks like the transaction is intra EU / no VAT and the importation into the UK would be our customers responsibility?

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