Examples of various export scenarios and VAT treatments: Examples involving exports to associated companies outside the EU: Indirect export to a non-EU branch
In this example
- A UK company has a non-EU permanently established branch. The parties are part of the same legal entity.
- A UK supplier sells goods for export to the non-EU permanently established branch and sends the invoice to the UK associated company (or invoices the non-EU branch).
- The UK supplier delivers the goods to a freight forwarder employed by the customer (or the freight forwarder collects the goods from the UK supplier).
- The freight forwarder exports the goods to the non-EU permanently established branch.
This is an example of an indirect export. The supply cannot be zero rated because
- the non-EU branch is part of the UK company
- therefore, the supply is made to a taxable person with a business establishment in the UK, with a subsequent transfer of own goods to the non-EU associated company
- The conditions set out in regulation 129 of the VAT Regulations 1995 cannot therefore be met.
This applies equally
- where the transaction is invoiced to the UK company or
- where the invoice is sent to the non-EU branch.