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HMRC internal manual

VAT Place of Supply (Goods)

HM Revenue & Customs
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Main rules: distance selling: meaning of the term "distance selling"

Distance selling is the term used to describes supplies of goods from one Member State to a person in another Member State where

  • the customer is not registered for VAT, and
  • the supplier is responsible for delivery of the goods.

The recipients of distance sales will mainly be private individuals, but they can also include small unregistered businesses, businesses making only exempt supplies, charities and public bodies.

The rules are intended to combat distortion of trade and unfair competition by transferring the place of supply to the Member State in which the customer receives the goods. Without this, cross-border supplies to private individuals would be subject to VAT in the Member State of dispatch as a domestic supply. With the variations in VAT rates between Member States this could encourage businesses selling mainly to private individuals (for example mail order companies) to relocate their businesses to Member States with the lowest rates of domestic VAT.

New means of transport are excluded from these arrangements. Consequently the place of supply for intra-EC supplies of new motor vehicles, boats and aircraft remains the Member State of despatch, regardless of the status of the customer. Nevertheless, special arrangements apply for taxation in the Member State of arrival and you can find further details about this in the manual covering new means of transport and Notice 728 (New means of transport).

Distance selling is also covered in the manuals covering the Single Market and registration, and Notices 700/1 (Should I be registered for VAT?) and 725 (the Single Market).