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Vat on sales to EU question

By Croner Taxwise


Q. My client sells children’s toys to VAT registered businesses in other member states. My client zero-rates these sales if he has obtained the customer’s VAT registration number and proof of dispatch. He then records the sales in Box 8 of his VAT return and completes an EC sales list. He has recently expanded his business and has now started to sell children’s books. The books are zero-rated in the UK already so is my client required to include these sales in Box 8 of his VAT returns and on his EC sales lists as well?

A. Yes. If a business makes any supplies of goods to a VAT registered customer in another EC member state then it must show the customer’s EC VAT registration number on the invoice, record the sale in Box 8 of the VAT return and also include it on an EC sales list. The logic behind this is that if the supply is liable to VAT in the customer’s member state then the customer may be required to account for acquisition tax.

If a business makes supplies to unregistered business customers or private individuals in other EC member states then it is not required to include these supplies in Box 8 of the VAT return or on an EC sales list.  Instead, VAT should be charged on these at the normal UK rate. However, a business may become liable to register for VAT in the EC member state to which the goods are supplied if the distance selling threshold is exceeded. VAT would then need to be charged at the appropriate rate in that member state. You can find more information on distance selling in VAT Notice 725: The Single Market