If you are importing goods into the UK and/or exporting goods overseas, there are a number of important regulations to understand in terms of VAT and duty. To complicate matters further, these rules vary depending on whether you are dealing with another EU country, or with the rest of the world.
The details can be complex but, in general, you need to ensure that you pay or charge the correct amount of VAT, and you may also need to pay import duty.
The first thing to check is whether you are dealing with another EU country.
Currently, the 28 EU member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Romania and the United Kingdom.
You are usually responsible for clearing goods through UK customs and paying any tax, and there are three key import taxes to consider: import VAT, import duty, and excise duty.
The importing of goods from other EU countries is usually referred to as ‘arrivals’ or ‘acquisitions’ rather than ‘imports’, a term reserved for goods arriving from outside the EU. You must pay VAT on acquisitions (acquisition tax), which is charged at the usual VAT rate. You can reclaim any acquisition tax in the same way as you reclaim VAT on purchases within the UK.
You also have to pay import tax on goods from non-EU countries and, depending on the type of goods and the country they originate from, you may also need to pay import duty, which is in itself subject to VAT. Import duty is determined by the value of the goods as noted on the invoice, plus insurance and the cost of freight.
Excise duties – sometimes known as ‘sin taxes’ – are charged on certain goods, including fuel, alcohol and tobacco products. These duties are charged regardless of whether they originate in an EU-country or not.
It is possible to defer payment of your import VAT, import duty and excise duty by storing goods in a customs warehouse. This means you don’t have to pay the taxes until the goods have left the warehouse, and is often used by companies who import goods that have a substantial excise duty.
The key tax to comply with here is export VAT, which depends on whether you are selling to another EU country or not, and whether your customer is VAT registered. It’s also worth noting that although you don’t have to pay any other export tax in the UK, you may need to pay import taxes depending on the countries you’re dealing with.
The terminology also varies depending on where you are exporting to, with exports to EU countries called ‘dispatches’ or ‘removals’, with ‘exports’ reserved for countries outside of the EU.
If you’re exporting within the EU to a consumer or a non-VAT-registered client, you charge VAT at the standard UK rates. However, if your customer is a VAT-registered business, goods are zero-rated with no export VAT added, but you do need to retain proof that the goods have left the country. In your VAT return, you must give details for each VAT-registered customer, including their VAT number and the value of the sale. For larger exporters (if your dispatches exceed £250,000 annually), you need to complete an Intrastat Supplementary Declaration.
Exports to countries outside of the EU are usually zero-rated, but you must retain proof that the goods have left the country. If exporting to a non-EU country via another EU country, you still don’t need to pay export VAT, but your records need to include details of the final destination.
Depending on the circumstances, you or your customer may need to pay other taxes in the countries you’re exporting to and, if you have a sales office in that country, you may also need to pay some local business taxes.
For more information on importing or exporting goods using Marpak packaging, contact us today.