Delivered Duty Paid and VAT

[Megz966]

Hi, we are a UK based company selling to consumers in the EU (mostly orders lower than 150 Euros to avoid duty). As we are VAT registered in a number of EU countries we are charging the customers the local rate of VAT, and filing VAT returns in those countries paying over the VAT collected. We’ve recently started sending their items on a DDP basis after Brexit, to avoid a lot of very angry customers having to pay Import VAT on their items. Our courier is clearing the goods for us and recharging us for the Import VAT. However, we are being told we cannot reclaim this VAT on our return. Therefore it feels prohibitive to continue as we are paying over two lots of VAT on one shipment.

Does anyone know if it is possible to send goods to individuals in the EU DDP, and be able to reclaim the import VAT?

[Trevor S]

Since 1/1/21, the treatment depends on whether you’re selling to EU customers from the UK, or from any stocks that you’re keeping in the EU.

From your question, I’m assuming that the sale is being made in the UK. The transaction can be zero-rated (for UK VAT purposes) because you’re immediately exporting the goods. Import VAT/duty would normally be charged to the importer (your customer), although through DDP you’re bearing the cost of this in order to avoid the customer incurring unexpected charges. You can’t reclaim this import VAT because it’s the VAT on your customer’s purchase.

But, in these circumstances, I can’t see why you would be required to charge VAT in the foreign country. Your supply has been made in the UK and VAT has been accounted on the import. So it may be that you’re currently overpaying VAT through your foreign VAT registrations?

Alternatively, if you held stocks of goods in the EU, you could make the sales from there. It would then be correct to charge foreign VAT to the customers. You would be the importer of the goods if you bought them into your EU stocks from the UK – so you could recover the import VAT on your foreign VAT return, as it would be the VAT on your purchase.

But there are further rule changes planned from 1/7/21 which may impact on you.

[Author]

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