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Explainer: paying VAT on imports from the EU to the UK

Following the UK‘s decision to leave the EU, the taxation processes for companies operating in the two markets have changed dramatically. As a result, one of the most frequent questions tax experts get when explaining imports regulation from the EU to the UK is whether VAT must be paid in the UK.

The simple answer is yes – a 20% VAT has to be paid on the products sourced from the EU both in B2B and B2C (when buying for personal use) scenarios if the shipment is worth more than GBP 135. The VAT paid on imports is deductible just like the standard VAT. In addition, goods worth over GBP 135 are subject to customs duties, meaning that the imports above the price limit include VAT, shipping fees and customs duties, becoming significantly more expensive.

The HMRC monitors the VAT compliance of imports. Typically, VAT and customs duties are checked at the border and sent back to the origin country if the taxes weren’t paid in the given amount of time. The standard waiting period until the purchase is returned is three weeks.

On the bright side, not all imported goods must include VAT. Among the exemptions are books, foodstuffs, and children’s clothing. And when the VAT is included, it usually is shown in the final price and paid to the authorities directly by the seller. If the seller chooses not to collect VAT, the process is arranged so that the buyer pays VAT before the goods are released from customs. Typically, the courier service contacts the buyer and informs them about any duties that must be paid on the purchase before delivering it.

Remember that re-imported goods (exported from the UK and imported back) are subject to a zero-rate VAT, just like food or drinks. You will have to submit evidence of the previous transactions to prove that your goods are not subject to 20% VAT. This rule is only applicable if the items were exported for less than a specified period of time.

The import VAT should generally be treated like the standard VAT, meaning that you should keep all transactions and provide complete and accurate information in your VAT returns. If you experience any difficulties with your VAT compliance, contact the Vatabout team. We provide timely and professional services to taxpayers in Europe.

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