VAT Question - buying from the Eurozone

[GnuBee]

Can someone explain to me how buying goods from the Eurozone works from a VAT point of view? I'm looking at purchasing some machinery from Germany which has a 19% rate - do I get charged that rate? Do I get charged 15% - I just don't know!

[Eric Mc]

Are you a UK based business registered for VAT in the UK?

[GnuBee]

Yes; UK based and VAT registered.

[Eric Mc]

What you need to do is notify your German supplier that you are UK VAT registered and quote to them your UK VAT number. Once they have this information they will be able to Zero Rate all sales of goods to you.

[GnuBee]

Thanks Eric - very helpful (as usual) and much better than trying to trawl through HMRC guidance notes :-)

[DonnyMac]

Hi Eric, does this apply to ROI as well?

[Eric Mc]

Absolutely.

Why would it not?

[DonnyMac]

Had not crossed my mind before and the accountant hadn't mentioned it - looks like the tax bill isn't going to be so bad after all.

Thanks Eric.

[Eric Mc]

The Irish Republic is treated just like any other EU country when it comes to imports/exports/VAT etc.

[BigAlinEmbra]

Eric Mc said:

The Irish Republic is treated just like any other EU country when it comes to imports/exports/VAT etc.

Because it's in the EU?

[Eric Mc]

BigAlinEmbra said:

Eric Mc said:

The Irish Republic is treated just like any other EU country when it comes to imports/exports/VAT etc.

Because it's in the EU?

Well spotted.

I was replying to DonnyMac's query that perhaps the Republic of Ireland might have a different arrangement with the UK regarding VAT. They don't.

[BigAlinEmbra]

Just tongue in cheek Eric, everyone knows you're the accounting sage of PH.
I was just taking advantage of the one opportunity when your answer wasn't 100% comprehensive!

[2 sMoKiN bArReLs]

BigAlinEmbra said:

accounting sage

two words often heard in the same sentence?

[skwdenyer]

DonnyMac said:

Had not crossed my mind before and the accountant hadn't mentioned it - looks like the tax bill isn't going to be so bad after all.

Thanks Eric.

I'm unclear as to what you mean "the tax bill isn't going to be so bad after all".

When you buy from an EU country in this way, you don't pay - say - ROI VAT to the ROI seller, but instead you have to "self account", i.e. pay the UK equivalent rate of tax to the UK VAT office. This makes it easy to claim back / offset. Otherwise you have to try to recover that VAT from the vendor's country, which can take a long time and cost money.

So, from a VAT perspective, buying from an EU country should be identical (cash-wise) to buying from a UK supplier.

Anecdotally, many people get this wrong, and don't pay any VAT at all on the purchase, until the next VAT inspection picks it up...

[Eric Mc]

skwdenyer said:

DonnyMac said:

Had not crossed my mind before and the accountant hadn't mentioned it - looks like the tax bill isn't going to be so bad after all.

Thanks Eric.

I'm unclear as to what you mean "the tax bill isn't going to be so bad after all".

When you buy from an EU country in this way, you don't pay - say - ROI VAT to the ROI seller, but instead you have to "self account", i.e. pay the UK equivalent rate of tax to the UK VAT office. This makes it easy to claim back / offset. Otherwise you have to try to recover that VAT from the vendor's country, which can take a long time and cost money.

So, from a VAT perspective, buying from an EU country should be identical (cash-wise) to buying from a UK supplier.

Anecdotally, many people get this wrong, and don't pay any VAT at all on the purchase, until the next VAT inspection picks it up...

The rules are slightly different if you are supplying a service compared to buying goods.

[BigAlinEmbra]

2 sMoKiN bArReLs said:

BigAlinEmbra said:

accounting sage

two words often heard in the same sentence?

Right enough, maybe he's more of an Oracle?

[skwdenyer]

Eric Mc said:

skwdenyer said:

DonnyMac said:

Had not crossed my mind before and the accountant hadn't mentioned it - looks like the tax bill isn't going to be so bad after all.

Thanks Eric.

I'm unclear as to what you mean "the tax bill isn't going to be so bad after all".

When you buy from an EU country in this way, you don't pay - say - ROI VAT to the ROI seller, but instead you have to "self account", i.e. pay the UK equivalent rate of tax to the UK VAT office. This makes it easy to claim back / offset. Otherwise you have to try to recover that VAT from the vendor's country, which can take a long time and cost money.

So, from a VAT perspective, buying from an EU country should be identical (cash-wise) to buying from a UK supplier.

Anecdotally, many people get this wrong, and don't pay any VAT at all on the purchase, until the next VAT inspection picks it up...

The rules are slightly different if you are supplying a service compared to buying goods.

Fair point. The OP was talking about goods:

GnuBee said:

Can someone explain to me how buying goods from the Eurozone works from a VAT point of view

but it wasn't clear what DonnyMac was talking about. You're quite right; the "place of supply" can get quite complicated in the service arena.

In fact, it can get so complicated, that it can be worth looking at other corporate arrangements (setting up overseas subsidiaries, for instance) just to make the VAT issue easier and quicker to deal with! Single market my arse!