Intra EC Sale

slackda

This question came up at work yesterday....

These al relate to in intra group sale/supply except the end user who is based in the the UK.

UK sales company places internal order to German distribution office, who then place order on Polish Factory, who then deliver direct to UK Customer.

AS for invoicing , Poland invoice Germany, then Germany invoice UK and the UK invoice End user.

Now i and a couple of colleges believe that the invoice from Poland, to Germany and Germany to UK are all VAT exempt and the invoice to the final end user is Vat-able.

however the German's are saying that the German to UK invoice should have UK Vat on it, but as they are not registered for UK VAT there is a slight issue.

what's everyone else opinion on this?

sdv

slackda wrote: »

This question came up at work yesterday....

These al relate to in intra group sale/supply except the end user who is based in the the UK.

UK sales company places internal order to German distribution office, who then place order on Polish Factory, who then deliver direct to UK Customer.

AS for invoicing , Poland invoice Germany, then Germany invoice UK and the UK invoice End user.

Now i and a couple of colleges believe that the invoice from Poland, to Germany and Germany to UK are all VAT exempt and the invoice to the final end user is Vat-able.

however the German's are saying that the German to UK invoice should have UK Vat on it, but as they are not registered for UK VAT there is a slight issue.

what's everyone else opinion on this?

Although this is a single group, presumably the group will have individual companies registered in each of the above countries.

In other words they are all independent companies trading with each other, having their own VAT numbers and TAX reference numbers.

The rule about VAT in EC countries is that all the goods are vatable at 0%. However, the invoice should be addresses to the one of the EC countries and the receiving company's VAT number should be displayed.

So when a UK company receives an invoice from a company in germany of say £1000, the UK company will pay vat to HMCE of £175 in box 2 of VAT return and at the same time reclaim VAT in box 4 as input vat paid.

When the UK company sells that goods for say £2000, then the vat will be payable and declared in box 1 as £350

Thus the UK company will not have paid out any vat on goods coming IN but will collect the vat of £350 from it's customer and pass it on HMRC when the goods are sold.

The added complication you have is that the UK company is not VAT registered.
I am not 100% sure but I suspect that the german company will not be able to issue an invoice at 0% (because UK VAT regn no can not be dispalyed on it's sale invoice), and issue an invoice with full vat on it.

or alternatively the UK company will receive a demand for the 17.5% vat due, from HMCR, on the Imports from Germany.

For the UK company there is no question of reclaiming input vat and no requirement to account for the output vat as it is not VAT registered.