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Dispatching your goods within the EU

By HMRC

What's involved in selling or dispatching goods to EU member states, including VAT, figures for Intrastat, licensing and controls.

Introduction

This guide will give you an overview of the procedures involved when selling or dispatching goods to any of the 28 member states that make up the European Union (EU), one of the world’s largest trading markets.

Goods leaving the EU and destined for a country outside the EU (commonly known as a third country), eg goods moving from the UK to the USA, are known as exports. Export processes are covered in a dedicated guide on this site.

Dispatching within the EU is relatively straightforward and legislation does not change often but traders must keep up with changes. You must, for example, know how to handle VAT, when to report your sales figures for Intrastat statistics, and whether your goods are subject to licensing or other controls.

For specific information on selling goods to countries outside of the EU, see exporting your goods outside the EU.

The EU as a single market

Four key freedoms of the EU benefit traders in all 28 member states. These are the free movement of goods, capital, services and persons.

In practical terms, this means that most shipments can be dispatched to other member states of the EU without special customs documentation. There are exceptions, eg sales to international organisations, which are treated as exports, and exports to special EU territories.

The main exclusions to this are goods subject to export licensing controls, eg military goods or Class A drugs, and goods classed as excise products, eg alcohol, tobacco and hydrocarbon oils.

The EU member states are:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Cyprus*
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • The Republic of Ireland
  • Italy
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • The Netherlands
  • Poland
  • Portugal
  • Romania
  • Slovakia
  • Spain
  • Slovenia
  • Sweden

*The European Commission has advised that the application of the 6th VAT Directive (Directive 77/388/EEC of 17 May 1977) shall be suspended in those areas of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control. Goods to these destinations continue to be eligible for zero rating as exports.

Goods in movement within the EU are termed as being dispatched upon leaving the state of origin of the goods, and as arrivals when entering the member state acquiring them. The use of these terms distinguishes single market trade from international trade with third countries - ie countries outside the EU, where the terms import and export apply.

Find out how the single market works for citizens and traders on the Europa website.

VAT within the EU and with other trade agreement countries

If you supply goods to another EU country these sales are technically known as dispatches or removals rather than exports. The term ‘exports’ is reserved to describe sales to a third country outside the EU.

Dispatches within the EU between VAT-registered businesses are not subject to VAT. This also applies to goods imported into the EU that have been released for free circulation following payment of import duties.

However, when you dispatch goods to someone in another EU country, who is not registered for VAT in that country, you should normally charge VAT.

Read about VAT: exports, dispatches and supplying goods abroad.

Customs declarations are not generally required for goods in free circulation within the EU, but traders must remember to raise VAT invoices showing the VAT Registration Number of their customers and obtain evidence of shipment.

How to handle VAT within the EU

If your EU customer is VAT registered and can provide you with a valid EU VAT Registration Number:

  • you can apply the zero rate of VAT to the sale
  • the VAT will be due in the destination country from the customer on acquisition of the goods
  • you must keep paperwork that shows both the seller’s and buyer’s VAT registration numbers (with the correct national codes) on the invoice
  • you must number your sales invoices in sequence
  • you must also obtain and keep valid evidence that the goods have been removed from the UK within certain time limits to be able to zero rate

Read more about zero rating in VAT rates explained: standard, reduced, zero, exempt.

However if your buyer is not VAT registered, or you cannot obtain their VAT number, then as the seller you must charge the UK rate of VAT.

Intrastat returns

Every business trading within the EU has to declare its sales on its VAT return. If your sales of goods exceed the applicable exemption threshold during a calendar year, you must also submit Intrastat returns each month.

Every VAT-registered business trading goods with other EU member states is obliged to declare certain information. The amount of information required depends on the value of their Arrivals (purchases or imports) or Dispatches (sales or exports).

Intrastat thresholds are reviewed annually and are £1.5 million for Arrivals and £250,000 for Dispatches.

Businesses with Dispatches or Arrivals of goods below this threshold are only required to declare the value of Dispatches (sales or exports) to other EU member states in box 8 and the value of Arrivals (purchases or imports) acquired from other EU member states in box 9 on their standard VAT return.

Businesses with Dispatches to or Arrivals from the EU above the Intrastat exemption threshold must also submit monthly Supplementary Declarations (SDs) to HM Revenue & Customs.

Larger businesses trading above the Intrastat delivery terms threshold of £24 million must also specify delivery terms information on their SDs.

VAT treatment in the EU differs to VAT for international trade

VAT is handled differently depending on whether you’re selling to a customer within the EU or outside the EU.

For dispatches or exports, download guidelines on security declarations on export and exit provisions from the Europa website (PDF, 272K).

International trade agreements and free trade associations

The EU also has several trade agreements in place with countries that aren’t EU members.

While as yet still an associate member of the EU, Turkey is in a customs union with the EU and thus has a relatively free market for UK exports of goods and services. Goods from EU members receive preferential treatment if they are in free circulation within the EU (eg wholly made or customs duties paid). Turkey follows similar customs procedures to EU member states.

Customs documents are required for exports to Turkey including a preferential statement on the movement certificates called an ATR Form if the goods are in free circulation.

The Isle of Man is in the EU, as part of its customs union and VAT agreement with the UK. The Channel Islands aren’t in the fiscal territory of the European Community but are part of the customs territory.

Export declarations for shipments to the Channel Islands aren’t generally required for goods in free circulation within the EU, but traders must use sequentially numbered VAT invoices. For controlled goods an export declaration using the National Export System is still required. It is recommended that traders supply a detailed commercial invoice. As with exports to third countries, traders can reclaim VAT once they prove goods have left the UK. There are restrictions on some goods, particularly agricultural goods and chemicals - for instance, it’s illegal to import hay and straw (even as packing material) into Jersey.

The European Free Trade Association’s (EFTA) four member states are Iceland, Liechtenstein, Norway and Switzerland. Three EFTA states (Iceland, Liechtenstein and Norway) belong to the European Economic Area (EEA), uniting the 28 EU countries and the EFTA states in an internal market. The market enables goods and services to move freely in the EEA in an open and competitive environment. Switzerland has separate trade arrangements with the EU. All EFTA members now benefit from virtually the same privileged relationship among themselves as they do with the EU. For trading purposes, goods moved from EFTA countries to EU members states are treated similarly to goods moved between EU member states.

Declarations, duties and licences for dispatches within the EU

You don’t usually need to complete a customs declaration for goods sold within the EU. There are exceptions, eg sales to international organisations and special territories.

The EU principle of free circulation allows for goods produced in the EU to be moved around the EU without paying duty. Goods imported from outside the EU may also qualify for free circulation once all import formalities have been completed and import duty and any other customs charges paid. This means that such goods can be sold on the Community market like any product made in the EC.

Some types of dispatch goods, such as weapons and drugs, are controlled and may require an export licence and other appropriate commercial paperwork.

Excise duty and duty drawback within the EU

This section explains what excise goods are, and how traders must comply with paperwork and payment requirements. It also tells you about the paperwork you need to complete for all dispatches.

Excise duty

Excise is a tax that HMRC charges on beer, wine, spirits and other alcoholic drinks, hydrocarbon oils (including fuel and petrol), cigarettes and tobacco that are acquired, imported or produced in the UK.

Under a relief scheme, goods may be consigned in duty suspension, which delays the payment of duty, to one of the following in the UK:

  • an approved excise warehouse
  • Registered Consignees and Temporary Registered Consignees

For more information about excise warehouses, read Notice 197 and for the Registered Consignee scheme, see Notice 203A.

Excise duty drawback

There are also schemes, such as excise duty drawback, to suspend duty on excise goods moving within EU member states. To claim, you must be running a business and you must supply the original duty payment document and may need to show an audit trail between the goods and duty paid. Additional information is necessary if you are not the business that originally paid the duty. Read Notice 207 about excise drawback eligibility. Consignments must be accompanied by the correct documentation (excise movement certificate) and financial security - a guarantee given by an approved guarantor who undertakes to pay money to HMRC in the event of an irregularity covered by the guarantee or bond. You must use HMRC’s electronic Excise Movement and Control System to provide an electronic Administrative Accompanying Document (e-AAD) for duty-paid goods moving within the UK and EU.

Spirits and wine with 30% alcohol or above, in bottles containing 35 centilitres or more, must bear a duty stamp when they pass the UK excise duty point and are released for sale. The stamp indicates that tax has either been paid or is due to be paid. To obtain duty stamps, traders must register with HMRC. Read more about the UK duty stamps scheme.

You should ensure that the two-letter codes for the country of dispatch and destination of each member state are used for the completion of accompanying documentation. Commercial invoices should reflect the changes required by the use of these two-letter codes.

Compliance with Intrastat

Intrastat is the EU-wide system of collecting information from VAT-registered traders to provide an overview of the dispatch and acquisition of goods between member states of the EU.

Intrastat only collects information about goods - services are not generally included.

Every business trading within the EU has to declare its sales goods on its VAT return. If your sales exceed the exemption threshold during a calendar year you must also submit Intrastat returns each month.

The declarations are known as Supplementary Declarations (SDs). Intrastat thresholds are reviewed annually. The thresholds are £1.5 million for Arrivals and £250,000 for Dispatches. The requirement to submit Intrastat Declarations is only applicable to VAT-registered traders.

Find out how to submit your return on the intrastat step-by-step guide.

Intrastat issues a list of commodity classification codes for goods, which you must use on the returns (these numbers must not be used for trade with countries outside the EU as there are differences).

You can find commodity codes and other measures applying to Arrivals and Dispatches for Intrastat by accessing the free online Intrastat Classification Nomenclature.

When you fill out the SD, you’ll need to provide the following information:

  • the commodity code of the goods
  • the value of the goods in sterling
  • net mass or supplementary unit of the goods (depending on the commodity code used)
  • nature of the transaction, eg sale
  • the destination of the goods
  • your agent’s details, if appropriate
  • delivery terms details if your trade exceeds the delivery terms threshold, currently set at £24 million

If your Intrastat return is late or inaccurate, you may have to pay a penalty. For more information, see the sections on where to get help and advice in Intrastat and Supplementary Declarations and penalties for late or inaccurate Intrastat Supplementary Declarations in the guide Intrastat - duty to report statistics.

Prohibitions, restrictions and licences

This section explains the types of dispatch that need an export licence and how to apply for one. Export licences are not generally required to dispatch from the UK to EU member states. However, there are restrictions on movements of certain goods. Most goods aren’t restricted, but some, including chemicals and military and paramilitary goods, need a licence, permit or certificate.

There may be licensing or certification requirements that apply to food or agricultural produce dispatched within the EU. You may need to contact the customs authorities in the country of destination in individual cases. For more information on trading in agricultural and food products, read international trade products and schemes: the basics.

If your business includes trade in certain services, you must make sure specific information is available to your customers about how you work before you complete contracts or make agreements.

From 2013 onwards, special rules will also apply to firms supplying communications and media services.

You will need to check with government departments for individual licence requirements. Common licences include:

Licences for strategic military and dual-use goods

All military controlled items and some highly sensitive dual-use goods (ie those listed on Annex IV of the EU Dual-Use List) need a licence, even if the goods are being dispatched to another EU country. Read more about export controls: an introductory guide and strategic exports: when to request an export licence.

Less sensitive controlled dual-use goods exports need a licence if shipped outside the EU.

Controls also apply to the brokering - which can include warehousing and shipping - and transport of dual-use goods. Read guidance about brokering (trade) of dual-use items).

The EU Dual-Use List is published in the UK as part of the UK Strategic Export Control Lists. This list of controlled goods includes a wide ranging variety of dual-use goods such as lasers, telecommunications equipment and much more.

All military goods - listed on the UK Military List which forms part of the UK Strategic Export Control Lists - require an export licence to all destinations including EU countries.

Dual-use goods are controlled depending on their technical specifications or performance. In general, you only need a licence to export outside the EU. However, you will need a licence for some highly sensitive items - such as nuclear materials - even if exporting to another EU country. These items are listed in Annex IV of the EU Dual-Use List (part of the UK Strategic Export Control Lists).

When you export to another EU country (known as an intra-community transfer), your commercial documentation needs to clearly state whether the items are controlled if exported outside the EU. Relevant commercial documents include, in particular, any sales contract, order confirmation, invoice or dispatch note.

You may also need a licence for brokering of military goods. Read about trafficking and brokering (trade controls).

For a general overview about strategic export controls, see the guide about export controls: an introductory guide.

Community/common transit procedures

This section gives an overview of transit options and explains what the New Computerised Transit System (NCTS) is.

Customs status of goods

Customs status defines goods in transit in the EU as being either Community or non-Community goods. Community goods are those goods that originate in the EU or which have been imported from outside the EU and released for free circulation, ie all import formalities have been completed and duties paid. These goods do not normally require Community Transit (CT) declarations.

You will however need to use CT to move:

  • non-community goods - goods imported from outside the EU for which the payment of EU duty and completion of import formalities are still pending.
  • both Community and non-Community goods to and from Andorra, San Marino and the ‘special territories’ of the EU, such as the Channel Islands.
  • goods to and via European Free Trade Association (EFTA) countries, and other signatories to the Common Transit Convention, where it is known as Common Transit. 

There are other transit procedures for moving goods within the EU. For more information see the guide on transit and other suspensive regimes.

The NCTS is a system available throughout the EU and EFTA countries for the submission of electronic transit declarations and for controlling transit movements by a series of information messages. For further information, see transit and other suspensive regimes and using the New Computerised Transit System (NCTS) to move goods across the EU and EFTA countries.

Published January 2015