Q:
Hello
I want to sell machinery from Germany to non VAT registered customers in the UK.
The machinery will have been subject to German VAT (USt I think) at 19%
So to my way of thinking the customer will not have to pay VAT when it arrives in the UK.
Am I correct?
Thank you, Richard
A:
Hi Richard
It depends on a number of factors, in particular who is actually purchasing the goods from the German supplier, ie whether it’s you or your customers. There are a number of situations that could apply which I’ve mentioned briefly below and explained where to find further information.
First a bit of terminology – imports from other EC countries are called “acquisitions”. If you aren’t familiar with the subject, I’d recommend that you read VAT Notice 725: The Single Market here http://tinyurl.com/2gfatu on the HMRC website which explains how EC trade works for VAT purposes. It’s a bit lengthy but worth spending the time reading to get to know the subject, especially if you are going to be purchasing goods from EC suppliers on a regular basis.
The VAT liability of the machines will depend on who buys and sells the good as principal. You say that YOU want to sell machinery to UK customers. I assume that this means that you will buy and sell as principal or at least in your own name. Here are the main scenarios:
-
- If you are already registered for VAT here in the UK, you quote your VAT registration number to the German suppiler and he won’t charge German VAT but you would declare acquisition VAT @ 17.5% (or 20% after 31 December) on your VAT return and charge UK VAT to the UK customers.
- If you aren’t registered for VAT and not liable to register for VAT, then the German supplier will charge you German VAT on the supply and you don’t have to charge UK VAT on the onward sale in the UK.
- If the goods are sold directly by the German supplier to the UK customers, then you are correct that the supplier will charge German VAT and no UK VAT would be chargeable.
Information on these first 3 scenarios is included in VAT Notice 725 mentioned above.
- Finally, there is a provision whereby if you are not already registered for VAT in the UK but you ACQUIRE goods (or make “relevant acquisitions”) in the UK from suppliers in other EC countries and the value of those acquisition exceeds certain limits (which are generally in line with VAT registration limits – ie currently £70k) then you become liable to register for VAT in the UK. This means that if you purchase goods from Germany (and/or other EC suppliers) and then sell them onto UK customers, you have register and charge UK VAT on the sales to the customers. See VAT Notice 700/12: Should I be registered for VAT, Section 6 here http://tinyurl.com/2uun6vo for further information on this subject.
This summary covers the main possibilities so you should find the information that you need above, but let me know if you need any further help.
Marie