On The Spot Blogs
#Tax Myth 8 - Exporting goods are VAT zero rated
You may know that exports are zero rated and think that there's nothing else to worry about. You're expecting to recover VAT on your costs so you're in a net recovery position each month. You might even be thinking of submitting monthly VAT returns to optimise your cashflow.
However, to be correct, you need to be able to agree with the following statement.
All my EU customers are VAT registered.
You should know this because you have to get their local VAT number and preferably show it on your invoice.
So, what do you do if you are selling goods to non-VAT registered people in the EU - probably consumers?
You have to charge UK VAT like any other sale to a UK consumer.
You may therefore have to regularly pay over UK VAT like any other UK business.
If you are selling a lot of goods to one EU country you then have to consider the local VAT rules.
For France, if you sell more than Euros 100,000 of product to local consumers, your business needs to be VAT registered in France.
What does that mean for my VAT returns?
You would revert to zero rating as you would now be selling to an EU VAT registered business. You would have to submit another VAT return in France and pay Euros to the french tax authorities.
Therefore if you make only sales to EU businesses, or are VAT registered locally, all your sales will be zero rated. However, when selling to EU consumers below certain thresholds you will need to charge UK VAT.