Tip:
Highlight text to annotate it
X
If you're trading with countries in the European
Union there are some rules and procedures you'll need to be aware of. Trading with other
EU countries could open up a huge marketplace for your business, giving you access to a
wide range of suppliers and customers. The single market for goods and services was set
up to make it easier for businesses throughout the EU to trade with each other. Goods can
move around freely with no customs duties and without too much red tape. But there are
some VAT rules to follow. And there may be duties to pay on certain goods. OK, so how
does VAT work if you trade in the EU? Well, if you buy goods for your business from another
EU country, you'll normally pay VAT on them. If you're not VAT registered, you'll usually
pay VAT at the rate that's charged in your supplier's country. If you are VAT registered,
you'll usually account for the same amount of VAT that you'd have paid if you'd bought
the goods back in the UK. You'll normally be able to claim the VAT back. What about
selling goods to other EU countries? Well, if you're VAT registered and you sell goods
to another VAT-registered business, you normally 'zero rate' them, meaning you add no VAT to
the price. But you'll need your customer's VAT number to do this. You'll also have to
keep evidence to show that the goods have left the UK. You'll also have to tell HMRC
about these sales by completing an EC Sales List. And if your sales to EU countries are
worth more than a certain amount, you'll need to provide information for national trade
statistics too. If you're VAT registered but your customer isn't, you charge VAT at the
normal UK rate. And if you're not VAT registered, there's no VAT. This is subject to a limit
- the distance selling threshold - in the customer's member state. There are other rules
that may apply if you trade in certain types of goods. For example, if you bring alcohol,
tobacco or energy products into the UK, you'll normally need to pay excise duty. And if you
trade in certain items, you may need a licence
or a certificate. And for food, you will
need to consider licences, permissions and quotas. The VAT rules for services are different
to those for goods, and depend on whether you're selling to businesses or consumers.
So, if you trade with other EU countries, there are procedures for dealing with VAT.
These apply to both goods and services. Certain goods are also covered by excise duty or export
licensing rules, and you may need to complete a declaration for statistical purposes.