Sale of goods to the EU on delivered terms

Following the UK’s departure from the EU in 2021 our experience was that some of our clients moved away from selling on EU delivered (DDP) Incoterms because of the new EU import and VAT complexities that arose for them.

However, it’s not always possible or desirable commercially to do that and some GB businesses have had to register for VAT in the EU because they are responsible for EU import clearance including import VAT and sometimes duty and their sales have a place of supply for VAT in the EU.

Potentially, there are some helpful options that GB businesses may be able to use instead of operating EU VAT registration(s) and these include:

Import One Stop Shop (IOSS)

If a GB business is selling non-excise goods to consumers that have a consignment value of €150 or less the EU IOSS scheme can facilitate a VAT exempt EU import and the payment to the relevant EU tax authority of EU VAT on the sale which the supplier charges to its customer. GB businesses need an EU representative for IOSS registration and compliance, a service which is offered by one of our Xeinadin partners in Ireland.

“Regimes 40 and 42”

In response to the January 2021 changes for GB imports to the EU, we are aware that an increasing number of freight and import/export companies are offering a service we felt was useful to alert clients to. It applies to both sales within and outside the EU country of import, whereby the freight company assumes responsibility for the EU VAT reporting obligations including on import VAT, instead of the GB business and submits appropriately coded customs declarations in the EU. 

This may be a very helpful arrangement for GB exporters that are involved in regular or one-off exports using DDP terms. We would stress that the mechanics of the VAT reporting should be clearly understood before agreeing to use this type of arrangement and we would be happy to assist with that if required.

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