These are the VAT rules when trading with the UK

Different VAT rules apply to countries outside the EU than if you trade within the EU. Countries outside the EU are called ‘third countries’. Find out how to apply the VAT rules in the United Kingdom (UK).

Buying products in the UK

When importing products from the UK to the Netherlands, you file an import declaration with customs. You will receive an invoice without VAT from your supplier in the UK. The Dutch Customs charges VAT over the value of the products, including any import duties. If the goods have UK preferential origin, no import duties apply.

Northern Ireland

After Brexit, Northern Ireland has a separate status within the UK and follows EU VAT rules. If you export products to Northern Ireland from the Netherlands, this remains an intra-community supply for VAT purposes. Your customer in Northern Ireland will calculate their own UK Value Added Tax (VAT).

Shipments from Northern Ireland to the Netherlands are an intra-community acquisition for VAT purposes. The condition is that your Northern Ireland supplier is an entrepreneur. You then include the Dutch VAT on this delivery in your Dutch VAT return.

Northern Ireland

After Brexit, Northern Ireland has a separate status within the UK and follows EU VAT rules. Shipments from Northern Ireland to the Netherlands are an intra-community acquisition for VAT purposes. The condition is that your Northern Ireland supplier is an entrepreneur. You then include the Dutch VAT on this delivery in your Dutch VAT return.

If you export products to Northern Ireland from the Netherlands, this remains a so-called intra-community supply for VAT purposes. Your customer in Northern Ireland will calculate their own UK Value Added Tax (VAT).

Selling products to the UK

On the invoice to your UK customer, you charge 0% VAT. This is only allowed if you can prove that the products have left the EU. You prove this with a consignment agreement or export declaration. If in doubt, use this tool provided by the Tax Administration (in Dutch). You do not owe Dutch VAT on exports. However, you must fill in the export turnover on your VAT return. You do so under question ‘3a leveringen naar landen buiten de EU (uitvoer)’ (‘3a, deliveries to countries outside the EU (export)’).

VAT in the UK

The British government levies VAT. Who pays this British VAT depends on your customer and the Incoterm® used. With the Incoterm® Delivered Duty Paid (DDP), for example, you as the seller are responsible for paying UK VAT. You can do so via a UK tax representative, or register yourself in the UK for VAT. You declare VAT to the UK government digitally. For this, you need software.

E-commerce

Online deliveries to private individuals are called e-commerce. E-commerce in the United Kingdom falls under export to a country outside the EU. You apply the 0% VAT rate in the Netherlands. This means you do not owe Dutch VAT. If the value of your shipment exceeds £135, you are responsible for paying British VAT.

Reverse-charge import VAT

As in the Netherlands, you can also reverse-charge import VAT in the UK. When importing into the UK, you pay UK VAT at customs upon importation. This payment coincides with the import declaration. If you do a lot of business with the UK and are liable for VAT, you may reverse-charge this import VAT on your tax return.

You must request permission for this reverse-charge from HM Revenue & Customs (HMRC). This syatem is called ' postponed VAT accounting'. The system resembles the reverse-charge mechanism in the Netherlands, often referred to as the ‘Article 23 permit’.

Tips

1. Apply for an EORI number. You need this customs identification number when doing international business.

2. If you make your own import declaration in the UK, or supply directly to UK consumers, apply for a UK VAT number. In addition, you need a UK EORI number for the UK import declaration.

4. Check the UK Trade Tariff database for the amount of VAT due per product type.

Receiving services from the UK

If you receive a service from the UK, you report the VAT in your periodic VAT return. The service provider in the UK passes the VAT requirement to you. You receive an invoice without a VAT amount. This states that the VAT passed on is reverse-charged. If the service provider is not allowed to reverse-charge the VAT, you pay UK VAT. You may be able to reclaim it in the UK. The Tax Administration’s tool (in Dutch) shows who should pay the VAT and where. This tool takes into account any exceptions.

Providing services to the UK

The standard rule for providing services to UK businesses (B2B) is that VAT is paid in the country where your client is based. The UK is the ‘place of supply of services’. In this case, UK VAT rules apply. When you provide services to private individuals (B2C) residing in the UK, you charge Dutch VAT as standard.

Exceptions sometimes apply to services to both B2B and B2C customers. This depends on the type of service you provide. Use the Tax Administration’s tool (in Dutch) to find out what you have to do with VAT.

Reverse charge export VAT

If you provide B2B services in the UK, you can sometimes pass the UK VAT to your UK customer. On your invoice, you then state your customer’s UK VAT number and include the text ‘reverse-charge mechanism’. Under this local reverse-charge mechanism, your customer will pay the UK VAT in the UK.

There are special rules for situations when you cannot reverse-charge VAT, such as construction work on property, or selling tickets for events in the UK. You are then responsible for calculating and paying UK VAT. You must apply for a VAT number from the UK government and file a declaration in the UK. The UK government explains how this works.

If you do not want to do this yourself, you can use a UK agent. This fiscal representative pays UK VAT on your behalf. Then you do not have to register your business in the UK. Discuss with your accountant or bookkeeper to discuss if this is sensible and and how to go about it.

Northern Ireland and services

Unlike the separate status for goods, this status does not apply to services (in Dutch). Northern Ireland is no longer an EU member state for services. You then treat VAT as stated in the paragraph above.

Do yu wnat to discuss your situation with an expert? Contact the KVK Advice Team.

Reclaiming VAT paid

You can reclaim the VAT you pay on goods and services you buy or use to do business in the UK. For example, business expenses for accommodation, meals, conferences, and travel expenses. You can also reclaim 50% of the VAT you pay for renting or leasing a car.

You reclaim VAT if your business is registered outside the UK, you do not live there, and you are not required to register for UK VAT. You can not reclaim VAT on:

• the purchase of a car
• goods and services bought for resale
• goods and services used for business entertainment
• goods and services used for private purposes

You reclaim VAT paid in the UK from HMRC using form VAT65A. The UK government provides more information on VAT refunds.