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Where Taxpayers and Advisers Meet

Reclaiming VAT paid to EU supplier for goods not entering UK & immediately exported outside EU

USTLBM
Posts:3
Joined:Thu Mar 04, 2021 2:08 pm
Reclaiming VAT paid to EU supplier for goods not entering UK & immediately exported outside EU

Postby USTLBM » Thu Mar 04, 2021 2:09 pm

Hi there. I am buying goods from a EU company who are delivering them to the Netherlands for me. I will then ship them from the Netherlands to Israel, ie outside the EU. The supplier (in Romania) wants to charge me VAT at 19% on the cost of goods to the delivery point in the Netherlands. As a UK company, is it right they do this, can I claim it back if so, and how? Important possibly to note, as you will be able to deduce, these goods will never set foot in the UK, and we are in no way the end user/consumer. Many thanks in advance, I appreciate it as I am a bit lost. Thanks!

USTLBM
Posts:3
Joined:Thu Mar 04, 2021 2:08 pm

Re: Reclaiming VAT paid to EU supplier for goods not entering UK & immediately exported outside EU

Postby USTLBM » Thu Mar 04, 2021 2:21 pm

I should clarify, apologies - where I say "I", I am referring to myself as director of the company, not an individual! Hope this clarifies.

Trevor S
Posts:108
Joined:Tue Jan 01, 2019 12:37 am

Re: Reclaiming VAT paid to EU supplier for goods not entering UK & immediately exported outside EU

Postby Trevor S » Fri Mar 05, 2021 12:19 am

Hi. The Romanian supplier is supplying the goods to you in the Netherlands. The fact that you're then exporting them to Israel doesn't affect how your supplier should charge you.

If you were registered for VAT in the Netherlands, the Romanian supplier wouldn't have to charge you VAT. Instead, you would account for acquisition VAT on your Dutch VAT return. You would also be able to reclaim this due to making the onward export to Israel. You wouldn't have to account for Dutch VAT on the export, although the goods would be subject to any applicable taxes/duties on arrival in Israel.

But, if you're not registered for VAT in the Netherlands, you're not able to account for acquisition VAT there. So the Romanian supplier has to charge Romanian VAT instead. You may be able to reclaim the VAT charged, but your claim would need to be made direct to the Romanian tax authorities. Forms may have to be completed in Romanian, so you may want to appoint someone to do this for you. See the "VAT refunds for non-EU businesses" section of this page on the EU website: https://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/vat-refunds_en

USTLBM
Posts:3
Joined:Thu Mar 04, 2021 2:08 pm

Re: Reclaiming VAT paid to EU supplier for goods not entering UK & immediately exported outside EU

Postby USTLBM » Fri Mar 05, 2021 2:11 pm

Trevor, many thanks for your clear and concise reply.
This is how I understood it also, but there was a faint hope I had misunderstood and that there was a much easier way to deal with it. It seems not!
Nonetheless, I sincerely appreciate your time and expertise on it and will begin to work out how to deal with it!
Thanks again

Trevor S
Posts:108
Joined:Tue Jan 01, 2019 12:37 am

Re: Reclaiming VAT paid to EU supplier for goods not entering UK & immediately exported outside EU

Postby Trevor S » Sat Mar 06, 2021 11:17 am

Another option if the transaction hasn't actually happened yet and you're not going to be doing anything to the goods in the Netherlands - could the Romanian supplier send directly to Israel? They would likely charge more for that than sending to the Netherlands, but you would save your "Netherlands to Israel" shipping costs. And because the Romanian supplier would be exporting the goods from the EU, they wouldn't have to charge Romanian VAT. Invoicing could still go via you, but the goods would have to go direct. See HMRC'S manual here: https://www.gov.uk/hmrc-internal-manuals/vat-single-market/vatsm5245. Although the examples are pre-Brexit, the general principle of the first example should still apply to your transactions, since your first two steps (Romania and Netherlands) are still EU.


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