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HMRC internal manual

VAT Export and Removal of Goods from the UK

Basic principles: Legal framework for zero-rating intra-EU removals

Article 138(1) of The Principal VAT Directive 2006/112/EC provides the legal basis for zero- rating intra-EU supplies of goods -

Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.

This Article is subject to conditions which Member States must lay down to ensure the straight forward application of the zero-rate, whilst preventing evasion, avoidance or abuse. It is enacted in UK law by section 30(8) of the VAT Act 1994 -

30(8) Regulations may provide for the zero-rating of supplies of goods, or of such goods as may be specified in the regulations in cases where –

(a) the Commissioners are satisfied ….. that the supply in question involves both-



(i) the removal of the goods from the United Kingdom; and

(ii) their acquisition in another member State by a person who is liable for VAT on the acquisition in accordance with the provisions of the law of that member State corresponding, in relation to that member State, to the provisions of section 10; and

(b) such other conditions, if any, as may be specified in the regulations of the Commissioners may impose are fulfilled.

Regulation 134 of the VAT Regulations 1995 provides for the zero rating.

Where the Commissioners are satisfied that-

(a) a supply of goods by a taxable person involves their removal from the United Kingdom,

(b) the supply is to a person taxable in another member State,

(c) the goods have been removed to another member State, and

(d) the goods are not goods in relation to whose supply the taxable person has opted, pursuant to section 50A of the Act, for VAT to be charged by reference to the profit margin on the supply,

The supply, subject to such conditions as they may impose, shall be zero rated.

Regulation 134 gives the general rules that apply to removals from the UK. In simple terms, the goods must have been removed from the UK to a person registered for VAT in another Member State. More detailed conditions are set out in Notice 725 Single Market paragraph 4.3 which has the force of law - see VEXP20400.