Postby Trevor S » Thu Jul 11, 2019 10:50 pm
Purely out of curiosity ... any thoughts on what the position would be if the scenario was reversed - i.e. a competition run by UK company, with a winner outside the EU?
Normal business gift rules would permit input VAT recovery on the purchase of the prize, but require an equal output VAT declaration when the prize is given away. If that still applied in this scenario, and the foreign winner was also required to pay their equivalent of import VAT on arrival, the goods would effectively have been taxed twice. Whereas if the goods had actually been sold to a foreign customer, the UK business could have zero rated the sale, and the goods would only have been taxed once (in the customer's country).
On the other hand, if the UK company was allowed to zero rate the free supply of the prize to the foreign winner, it would be in the UK company's interest for the winner to be based abroad, as they would save the VAT cost!
Perhaps this is why competition terms and conditions often limit them to residents of the promoter's country!