Find out if VAT is due when you sell, supply or transfer goods out of the UK, and about zero-rated goods, proof you must keep and which forms to fill in.
If you sell, supply or transfer goods out of the UK to someone in another country you may need to charge VAT on them. You can zero rate most supplies exported outside the European Union (EU), or sent to someone who’s registered for VAT in another EU country.
If you sell goods or services to someone in another EU country, who is not VAT-registered, you charge VAT in the normal way.
Sales to another country inside the EU are called ‘dispatches’ or ‘removals’. ‘Exports’ describes sales to a country outside the EU.
Sales to someone who is VAT-registered in another EU country
If you’re sending goods to someone who is VAT-registered in the destination EU country, you can zero rate the supply for VAT purposes, as long as:
- the goods are sent out of the UK to another EU country
- whoever you’re sending them to is VAT-registered in another EU country
- you get their VAT registration number, including the 2 letter country code, and show it on your sales invoice
- you’ve got ‘evidence of removal’ showing that the goods have gone out of the UK
- you dispatch the goods and get evidence of removal within 3 months
To account for the VAT on zero-rated sales to another EU country, include the value of the goods and services in your VAT Return.
Your ‘evidence of removal’ will include a number of things like:
- customer orders
- correspondence with customers
- sales invoices
- packing lists
- invoices from hauliers
- bank statements
- consignment notes showing the goods have been received in another EU country
It must also show:
- your business details
- your customer’s details
- a detailed description of the goods and their value
- the method of transport and route
- where the goods are going to
You must keep evidence for 6 years. HMRC can ask to see it and if we think it’s unsatisfactory you may have to pay VAT on the goods or services you sold. If you cannot get this evidence in time you must account for VAT on your return.
Goods dispatched by post
You can zero rate goods you send by post to a customer who is VAT-registered in another EU country.
You’ll need to use form ‘Certificate of posting goods form 132’, or ask the Post Office for a certificate of posting. If you use Royal Mail Parcel Force, they’ll give you a dispatch pack with accounting documents, a customs export declaration, and a receipt copy. The dispatch pack goes with the goods. For EU sales you do not need to fill in a customs export declaration form.
Dispatch by courier
If you use courier or fast parcel services, you’ll normally be given an airways bill number for each shipment. This is acceptable evidence that the goods have gone abroad. Otherwise, they’ll give you a customs dispatch pack receipt copy.
Collection by customer
If your customer arranges to collect the goods from you, you’ll need to be sure how and when the items are leaving the UK, and what evidence of removal they’ll give you, before you agree not to charge VAT. If you have any doubts, you should take a deposit that’s the same as the VAT that would be charged. You can refund the deposit if they give you the evidence that the goods have left the country within the time limit.
Call-off stocks are goods that you dispatch from the UK to another EU country, and keep in storage ready for a particular customer in that country. The customer only calls for them (‘call-off’) when the goods are needed, and until this happens, you’re still considered the owner of the goods. But as long as the customer either operates the storage facility where the goods are held, or is at least aware that the goods have been delivered into storage for them, you can treat the goods in the normal way and, if all the usual conditions have been met, zero rate the supply.
If you’re holding call-off stocks for a customer but cannot meet these conditions, you must treat them as consignment stocks.
Consignment stocks are goods you dispatch to another EU country where they’re held somewhere before you finally supply them to a customer in that country.
Consignment stocks are treated as supplied in the UK and liable to UK VAT unless you’re also registered for VAT in the EU country that they’re sent to, in which case they can be zero-rated (as long as you meet all the usual conditions). You may also have to account for VAT in that country, and so must register there. Contact the tax authority in that country to check.
Details of contact addresses and other useful information provided by the VAT authorities in other member states can be found on the European Commission website.
How to report zero-rated EU sales
All UK registered traders have to send lists of their EU sales to HMRC.
You have to tell us about zero-rated EU sales on 3 different forms:
- your normal VAT Return in box 6 and box 8
- the EC Sales List (ESL)
- the Intrastat Supplementary Declaration, if you sell over £250,000 of goods to other EU customers in a year
We’ll send you the ESL automatically if you’ve completed box 8 on your VAT Return.
Sales in another EU country to someone who is not VAT-registered
If you supply goods to a customer in another EU country who is not registered for VAT in that country and you’re responsible for delivery, this is a ‘distance sale’. The most common examples are mail order or internet sales to private individuals in another EU country.
But if you transfer your own goods to another EU country, whether to another part of your organisation or to put in storage, we treat this as if you’d made a supply in the UK and an acquisition in the destination country. You may have to account for UK VAT unless you’re also registered for VAT in the EU country where you send them, in which case you can zero-rate them as long as you meet all the usual conditions. You may also have to account for acquisition VAT in that country, and so have to register there.
When you must register for VAT in other EU countries
For distance sales, you must charge VAT at UK rates in the normal way. But each country has a ‘distance selling threshold’. If the value of your sales to that country is over this limit, you must register for VAT in that country, and charge their rate of VAT on sales to that country.
How to charge VAT to someone in another EU country
If you sell goods or services to someone who is not VAT-registered in another EU country, you must charge VAT in the normal way, just as you would for a UK customer. You include the sale in your VAT Return for the period when the tax point takes place.
If you supply excise goods (that is, goods that excise duty is payable on, such as alcohol or tobacco) to someone who is not registered for VAT in another EU country, the VAT due depends on whether you delivered them or your customer collected them.
If you deliver the goods (or arrange for them to be delivered), they’re treated as distance sales in the country you deliver them to, and you must register for VAT there no matter the value of the sales. If the customer collects them you can zero-rate the supply, unless they’re for private consumption, in which case they’re liable to UK VAT in the normal way.
How to report EU sales where you’ve charged VAT
If you’ve made EU sales where you’ve charged VAT, include the value of the sales in box 1 and box 6 on your return, and pay HMRC any VAT you’ve charged in the usual way. You’ll not have to report these sales on an ESL.
But you’ll have to complete an Intrastat Supplementary Declaration if your sales to other EU customers are more than £250,000 worth of goods in a year.
Temporary movements of goods to another EU country
You may have to send goods to another EU country so you can do a job there. These are called ‘temporary movements’. You’ll not have to account for VAT on these goods if all of the following apply:
- you do not have a place of business in the EU country where you’ve sent the goods
- you’ve got a contract to carry out in that country and need the goods for that contract
- you intend to return the goods to the UK when the contract is finished
- you keep evidence that the goods have left the UK and returned
- you keep a register of temporary movements to other EU countries
Installing or assembling goods in another EU country
You might have a contract to supply goods that you’ve got to install or assemble on site. When this happens, your supply takes place in the country where you install or assemble the items. You might have to register for VAT in that country. Some EU countries have a simplified system for this but you’ll need to check with the VAT office in that country.
Send goods to another EU country for repair or processing
If you send goods to another EU country for repair or processing, you do not make a sale, so you do not need to charge VAT. The EU repairer or processor will not charge you VAT for their work if you’re registered for VAT in the UK. But you have to operate the ‘reverse charge procedure’ when the goods come back, you charge yourself VAT, and then reclaim it in the normal way. There’s no net effect as far as you’re concerned.
You’ll also have to:
- keep a record of the temporary movement of goods
- fill in the Intrastat Supplementary Declaration for the dispatch and return of the goods
VAT on exports to non-EU countries
VAT is a tax on goods used in the EU, so if goods are exported outside the EU, you do not charge VAT. You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale. This can be longer for goods that need processing before export and for thoroughbred racehorses.
The time of sale is the earlier of the day you:
- send the goods to your customer
- get full payment for them
You must not zero rate sales if your customer asks you to deliver them to a UK address. If the customer arranges to collect them from you (an indirect export), you may be able to zero rate the sale as long as you meet certain zero rating conditions.
Goods you export temporarily or send on sale or return
If you send goods outside the EU temporarily for exhibition, or sell goods on sale or return and they’re returned, then no sale has taken place and you do not have to pay VAT in the UK when the goods are returned.
Goods processed in the EU before they’re exported
You might sell goods to a non-EU customer, but first send them to another EU business for processing. You can still zero rate the sale if:
- the goods are delivered to the EU business, not sold to them
- the EU business does not use the goods, it only processes them for export
In addition, your records must show:
- the name and address of the customer
- invoice date and number
- description, quantity and value of goods
- name and address of EU processor
- date by which goods must be exported
- proof of export and date of actual export
If goods have to be processed in the EU after leaving you but before they’re finally exported, the time limit is 6 months.
You can ask your freight forwarder, shipping company, airline or other agent to handle the paperwork. There’s more about appointing an export agent in VAT Notice 703.
Speeding up and simplifying the export process
The National Export System (NES) allows you to send export documentation to HMRC electronically. This makes exporting your goods quicker and easier.
Getting a customs identification number
If you plan to export goods to countries outside the EU you must get an Economic Operator Registration and Identification number (EORI) to deal with EU Customs authorities.
Your EORI number is unique and valid throughout the EU. You’ll need it when you supply information to customs authorities, for example when completing customs declarations.
You’ll need an EORI number even if you only occasionally export goods outside of the EU.
Proof of export
You need documentary evidence of goods leaving the EU to zero rate your exports. This can be commercial or official evidence. If you do not get this evidence in time, you’ll have to account for the VAT on your return.
If you use the National Export System, you’ll automatically get an electronic Goods Departed Message when the goods leave the UK, and this is acceptable official evidence.
In addition to evidence that the goods have physically left the EU, you’ll need to hold supplementary evidence, for example, within your accounting system, to show that a transaction has taken place.
If the evidence is unsatisfactory, then you may have to account for VAT on the sale.
You must keep all the evidence for 6 years and show it to HMRC if they ask to see it.
Exports to the Channel Islands
Excise goods or goods subject to customs control exported to the Channel Islands need a Single Administrative Document (SAD) declaration on form C88. You can do this through the The National Export System for export declarations.
Other goods need either:
- a bulk National Export System declaration by the shipping line, supported by individual Consignment Notes and Customs Declarations (CNCD)
- individual National Export System declarations that you make
Exports via other EU countries
If you send goods by road across the EU before they’re finally exported, you’ll need either:
- official proof of export for VAT, either form C88 (SAD) or the National Export System form endorsed at the customs office of exit from the EU
- commercial transport evidence that the goods left the EU
If you do not have one of these, you cannot zero rate the sale.
Exports by retailers
You can zero rate sales of goods for export to private customers if you meet the conditions for commercial exports, or the conditions of the VAT Retail Export Scheme.
VAT accounting and record keeping for exports
You’ll need to keep several records for VAT on exports:
- copies of invoices and other sale documents
- your register of temporary movements
- evidence of export
And put your sales into Box 6 on your VAT Return.