Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Export and Removal of Goods from the UK

HM Revenue & Customs
, see all updates

Examples of various export scenarios and VAT treatments: Examples involving exports to associated companies outside the EC: Indirect export to a non-EC branch

In this example

  • A UK company has a non-EC permanently established branch. The parties are part of the same legal entity.
  • A UK supplier sells goods for export to the non-EC permanently established branch and sends the invoice to the UK associated company (or invoices the non-EC 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-EC permanently established branch.

Diagram of indirectexport to non-EC permanently established branch.

This is an example of an indirect export. The supply cannot be zero-rated because

  • the non-EC 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-EC 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-EC branch.