Q:
Hi All,
I have a question which is proberly easy to resolve, but have not come across this scenario before, so not sure how to account for it.
We are based in the UK and have sold goods to a customer who is Norway, but they have requested the goods to be shipped to Germany.
As Norway is outside the EU do we have to charge VAT as the goods are being shipped to Germany, and will this sale reflect on the EC Sales.
Am I correct in saying this sale will reflect on the Intrastat as a German dispatch?
Thank you
Tony
A:
Tony
My understanding of this scenario is that you must first identify if the Norwegian intermediate supplier is VAT registered in Germany or the UK. If they are registered in Germany you are making an intra-EC dispatch to Germany, so it is included on your Intrastat. If they are registered in the UK you are making a domestic supply to the UK VAT registration, so the Inrtastat reporting obligation will be the customers, not yours.
If however the Norwegian intermediate supplier does not have a VAT registration in the EC you must look at the terms of the transaction- is the Norwegian firm acquiring the goods in the UK for dispatch to Germany, or acquiring the goods in Germany from the UK? (this is not always straightforward). In either case the Norwegian firm could be liable to register for VAT in either the UK or Germany. If the value of the supply is less that £70,000, and the place of supply is the UK, then the Norwegian firm may not have to register (the UK has a non-resident threshold of £70k per year) but you would need to charge VAT on your supply, which the Norwegian firm could not recover. You would not include this domestic supply on tyour Intrastat. As Germany has a nil non resident threshold if the Norwegian firm was making the acquisition in Germany it would have to register for VAT there to enable it to account for VAT. You would then be dispatching to Germany, so would include on your Intrastat.
Hope this helps- it is my understanding, if it’s incorrect I apologise, I’m sure somebody will correct me if I’m wrong.
Robert
A:
Hi Tony
Yes in principle I agree with Robert’s comments above that if the goods are going to Germany but the purchaser is not registered for VAT in Germany, then your sale is liable to UK VAT. But it could be even more messy as depending on the circumstances. There are several possible scenarios which could involve triangulation (which is possible even involving non-EC suppliers) and/or either you or your customer being liable to register for VAT in Germany and it really isn’t possible to cover everything here.
In order to give more detailed information, I’d need to know why the goods are going to Germany and not to Norway. This is important as if your customer is not registered for VAT, you may be liable to register for VAT there as the sale is to a non-registered person. This would be regarded as a “distance sale” to Germany and as I understand that Germany has a nil registration threshold (I’d have to double-check to be certain, but in any event unlike the UK VAT registration limit of £70k) you would have have to register for VAT there. More information on this can be found in VAT Notice 725: The Single Market, section 6 http://tinyurl.com/3a8v9zq. I’m guessing that you won’t want to have to register in Germany!
Either way, it is correct that if the sale is to a customer who isn’t VAT registered, then in principle the transactions don’t have to be included either on the EC Sales List or the Intrastat.
Marie