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Sales to private individuals outside the UK


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6th December 2012

Did you know your client may have a requirement to register for VAT in another EU Member State?

Many businesses have significantly increased their customer base by selling on the internet over recent years, however did you know that if your client makes significant sales to customers in another EU Member State then they may have a requirement to register and account for VAT in that country under the Distance Selling Rules?

As you are most probably aware, if a UK business sells goods to a private individual (or an entity that is not 'in business') in another EU Member State and the goods are delivered to that customer, UK VAT is charged and accounted for on the sale at the prevailing rate. The UK business must monitor the level of sales made to each EU Member State as each country has a Distance Selling Threshold. When the Distance Selling Threshold is breached the UK business is obliged to register and account for VAT in that country.

Many UK businesses and accountants are not aware of this rule and this can lead to significant financial issues as many countries have late registration penalties and interest. There are also rules in place that allow other EU Tax Authorities to contact the UK Tax Authorities to collect debts on their behalf. If a business is fully aware of the rules regarding Distance Selling they can make commercial decisions on whether to cap sales to certain countries when they reach a threshold to avoid the obligation to register and account for VAT or to make a timely registration application.

Please refer to the Europa website to identify the thresholds for each EU Member State.

About the Author

The VAT People are leading VAT and Customs Duty consultants based in the North West of England. We work with a wide range of businesses throughout the UK as well as assisting our accountancy colleagues to unravel the thorny VAT issues for their clients. We are one of the UK's largest and most comprehensive sources of VAT and Customs advice, our consultancy team having over 140 years of experience in VAT and Customs gained in either HMRC or a Big 4 accountancy practice environment.

Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.

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Article Published/Sorted/Amended on Scopulus 2013-05-17 14:02:22 in Tax Articles

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