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

HMRC internal manual

VAT Place of Supply (Goods)

From
HM Revenue & Customs
Updated
, see all updates

Main rules: distance selling: distance sales to the UK

 

EC Law

Articles 33 and 34 Principal VAT Directive
 

33(1) By way of derogation from Article 32, the place of supply of goods dispatched or transported by or on behalf of the supplier from a Member State other than that in which dispatch or transport of the goods ends shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends, where the following conditions are met:

(a) the supply of goods is carried out for a taxable person, or a non-taxable legal person, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1) or for any other non-taxable person;

  
  
(b) the goods supplied are neither new means of transport nor goods supplied after assembly or installation, with or without a trial run, by or on behalf of the supplier.

(2) Where the goods supplied are dispatched or transported from a third territory or a third country and imported by the supplier into a Member State other than that in which dispatch or transport of the goods to the customer ends, they shall be regarded as having been dispatched or transported from the Member State of importation.

34(1) Provided the following conditions are met, Article 33 shall not apply to supplies of goods all of which are dispatched or transported to the same Member State, where that Member State is the Member State in which dispatch or transport of the goods ends:

(a) the goods supplied are not products subject to excise duty;

  
  
(b) the total value, exclusive of VAT, of such supplies effected under the conditions laid down in Article 33 within that Member State does not in any one calendar year exceed EUR 100000 or the equivalent in national currency;  
  
(c) the total value, exclusive of VAT, of the supplies of goods, other than products subject to excise duty, effected under the conditions laid down in Article 33 within that Member State did not in the previous calendar year exceed EUR 100000 or the equivalent in national currency.

(2) The Member State within the territory of which the goods are located at the time when their dispatch or transport to the customer ends may limit the threshold referred to in paragraph 1 to EUR 35000 or the equivalent in national currency, where that Member State fears that the threshold of EUR 100000 might cause serious distortion of competition.

Member States which exercise the option under the first subparagraph shall take the measures necessary to inform accordingly the competent public authorities in the Member State in which dispatch or transport of the goods begins.

(3) The Commission shall present to the Council at the earliest opportunity a report on the operation of the special EUR 35000 threshold referred to in paragraph 2, accompanied, if necessary, by appropriate proposals.

(4) The Member State within the territory of which the goods are located at the time when their dispatch or transport begins shall grant those taxable persons who carry out supplies of goods eligible under paragraph 1 the right to opt for the place of supply to be determined in accordance with Article 33.

The Member States concerned shall lay down the detailed rules governing the exercise of the option referred to in the first subparagraph, which shall in any event cover two calendar years.

UK Law

Section 7 VAT Act 1994

7(4) Goods whose place of supply is not determined under any of the preceding provisions of this section shall be treated as supplied in the United Kingdom where -
 

(a)the supply involves the removal of the goods to the United Kingdom by or under the directions of the person who supplies them;

(b)the supply is a transaction in pursuance of which the goods are acquired in the United Kingdom from another member State by a person who is not a taxable person;

(c)the supplier -

(i)is liable to be registered under Schedule 2; or

  
  
(ii)would be so liable if he were not already registered under this Act or liable to be registered under Schedule 1; and

(d)the supply is neither a supply of goods consisting in a new means of transport nor anything which is treated as a supply for the purposes of this Act by virtue only of paragraph 5(1) or 6 of Schedule 4.

Commentary

Section 7(4) applies where a supplier in another EC Member State is making distance sales (see VATPOSG3510) to customers in the UK. Without this the place of supply is the Member State of departure of the goods (see VATPOSG3810). But in cases where
 

  • the value of supplies to UK customers exceeds the UK threshold (see below), or
  • a supplier, with sales below the threshold, has opted to register for VAT in the UK, or
  • the supply involves goods that are subject to excise duty (in which case the threshold does not apply)

then the place of supply becomes the UK and the supplier is liable to register for VAT in the UK.

The UK threshold is currently set at £70,000 in a calendar year. Exceeding it is what triggers the liability to register under Schedule 2, as referred to in 7(4)(c) above. You can find out more about registration for VAT as a result of distance sales in the manual covering registration.