RCB/26/13 VAT—changes to rules for zero-rating supplies of goods for indirect export outside the EU
Revenue & Customs Brief, Issue 26. 6 September 2013
Purpose of this Brief
This Brief provides information on changes to certain rules for zero-rating supplies of goods for export outside the European Union (EU) that take effect from 1 October 2013.
Action to take
To be aware of the changes and how they impact on affected transactions.
In principle, no VAT is due on goods which are exported from the EU (referred to as zero-rating). Strict conditions must be met before sales can be zero-rated and those conditions are laid out in Notice 703 “VAT: Export of goods from the United Kingdom”.
Under EU VAT law (Directive 2006/112, art 146(1)(b)), no VAT is due on indirect exports provided the overseas customer does not have a business establishment in the supplier's country (note: indirect exports occur where goods are collected, or arranged to be collected, by the overseas customer). The UK has implemented this condition into national law (VAT Regulations 1995, reg 129) but with a further requirement that the customer is not registered for VAT in the UK. This is reflected in paragraph 3.4 of Notice 703 which excludes zero-rating where goods are supplied to a business registered for VAT in the UK.
EU law does not deny zero-rating where an indirect export takes place, and the customer is registered for VAT