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HMRC internal manual

VAT Transport

Transport and related services connected with imports and exports: Law

The law relating to the zero-rating for transport and related to services connected with imports and exports is in the VAT Act 1994, Schedule 8, Group 8, item 11(a).

Item 11. The supply-

  1. of services consisting of



    1. the handling or storage of goods at, or their transport to or from, a place at which they are to be exported to or have been imported from a place outside the member States; or
    2. the handling or storage of such goods in connection with such transport.

Item 11(a) is based on the Principal VAT Directive (Directive 2006/112) Articles 144 and 146(1)(e)

144 Member States shall exempt the supply of services relating to the importation of goods where the value of such services is included in the taxable amount in accordance with Article 86(1)(b).

146(1) Member States shall exempt the following transactions:

(e) the supply of services ,including transport and ancillary transactions, but excluding the supply of services exempted in accordance with Articles 132 and 135, where these are directly connected with the exportation or importation of goods covered by Article 61 and Article 157(1)(a);


Item 11(a) of Group 8 zero-rates certain services, with a place of supply in the UK (see VATPOSTR), which are connected with goods which have been imported from, or are to be exported to, a place outside the EC. Relief under this item is confined to services which have a direct connection with an actual movement of goods which are imported or exported, so it does not extend, for instance, to long term storage or other services unconnected with the movement of the goods.

Zero-rating can apply whether supplies are made by the main contractor or a sub-contractor, and also applies to freight forwarders who buy in these services and sell them on as principals.