VAT, imports and re-exports

[Nonimous]

My client, Miss Z, imports (say) Persian carpets, from a non-EU state, and sells them on in the UK

She pays the import VAT which she then reclaims via the VAT return.

Miss Z is now talking about expanding her sales into Europe. I understand that if she were to import a carpet to the UK, and then sell it on to another VAT-registered trader who is in, say, France (within the EU but outside the UK), then provided she was able to prove that the carpet left the UK again within a month, she would not pay the import VAT but the eventual purchaser would.

However, I can't work out what happens if the carpet never enters the UK - which may well be the case since it will most probably be cheaper to send said carpet direct from the Middle East to France rather than from the Middle East to the UK and then on to France.
I would guess that the French trader would pay the import VAT and deal with it via their own return. But what happens on the invoice from Miss Z to the French trader for the carpet?

[Generix]

If your client is importing direct into France, and will be the importer of record, and then will make a subsequent supply in France, then its highly likely that your client will need a FR VAT number. Unfortunately France has some retarded protectionist rules (which in my opinion are against the spirit of the EU VAT directive), which might mean a VAT number is not required but similarly it will take a while to get the import VAT back.

If your client wants to do such business (and is selling to other FR VAT registered businesses) it would be easier if they sold on DAP terms and left the customer to be the importer of record. Then there would be no import VAT to recover for your client, no sales VAT to account for and no reporting of the transaction required on your VAT returns. Note however if the item is subject to a positive rate of Duty then your client might need to discount the price to take into account that the customer will be paying the Duty themselves.

Hope that helps.

[Generix]

....then its highly likely that your client will need a FR VAT number....which might mean a VAT number is not required but similarly it will take a while to get the import VAT back.

first part should read - 'making domestic taxable sales in FR and would normally need a local VAT number" then it should explain about FR rules which means this might not be possible.