Does a business have to sell @ zero VAT within EU?

cormie

Hey folks,
Just curious, I know if a VAT registered customer buys from a VAT registered business within the EU, and the customer is in a different member state to the business, the business can put the customer's VAT number on the invoice and not charge any VAT.

Is this standard practice and is there any requirement for the business to do this, or is it at their own discretion? I know a business can choose who they want to do business with or not and if they don't wish to have you as their customer, that's their choice, but I've come across it a few times that businesses have said that they won't do it.

I don't really see it making any odds to them as they either have to pay vat on the sale or not pay vat on the sale, there's no downside for them, so what reasons would they have for not doing it, other than maybe having to do a manual entry on an invoice?

jim o doom

cormie wrote: »

Hey folks,
Just curious, I know if a VAT registered customer buys from a VAT registered business within the EU, and the customer is in a different member state to the business, the business can put the customer's VAT number on the invoice and not charge any VAT.

Is this standard practice and is there any requirement for the business to do this, or is it at their own discretion? I know a business can choose who they want to do business with or not and if they don't wish to have you as their customer, that's their choice, but I've come across it a few times that businesses have said that they won't do it.

I don't really see it making any odds to them as they either have to pay vat on the sale or not pay vat on the sale, there's no downside for them, so what reasons would they have for not doing it, other than maybe having to do a manual entry on an invoice?

They do not have to, but recouping the VAT the trader has been charged is much more difficult.

If you sell in Ireland to a business in France, you are paying the VAT here in Ireland. Which means the French trader cannot simply input a deduction ion his French VAT 3 return. He would be claiming VAT paid in Ireland from the French tax take.

The trader would have to make an international VAT claim which in Ireland entails filling out a specific form, posting it to the section that deals with international VAT claims and waiting for repayment.

Much more of a pain in the arse than claiming VAT back that was actually charged in the country of sale.

Also, if a person mistakenly claims back foreign VAT, and it is discovered during audit, they become liable for the VAT, plus any penalties and/or interest.

Hope that clears it up for ye!

cormie

Thanks for that That's how I understood it alright. This is actually for me buying stuff from outside of Ireland. I was asking the seller to just zero rate it and they said "We are not able to remove the VAT from our items as they are a set price and are unable to be changed. " , to which I replied: "Thanks for that. This is a standard procedure when supplying to a VAT registered buyer within the EU, but outside your own country. Rather than charging UK VAT, you just charge zero vat and note the buyer's VAT number on the invoice. You then do not have to pay any VAT in your return. It's to allow an easier and more fluid market within the EU, which you guys are still part of for now haha.

Can you check to see if it's possible to do this as a manual sale and let me know? My VAT number is IEXXXXX"

So will wait and see what they say back, otherwise I might just have to find another seller, or else pay the VAT I guess.

jim o doom

cormie wrote: »

Thanks for that That's how I understood it alright. This is actually for me buying stuff from outside of Ireland. I was asking the seller to just zero rate it and they said "We are not able to remove the VAT from our items as they are a set price and are unable to be changed. " , to which I replied: "Thanks for that. This is a standard procedure when supplying to a VAT registered buyer within the EU, but outside your own country. Rather than charging UK VAT, you just charge zero vat and note the buyer's VAT number on the invoice. You then do not have to pay any VAT in your return. It's to allow an easier and more fluid market within the EU, which you guys are still part of for now haha.

Can you check to see if it's possible to do this as a manual sale and let me know? My VAT number is IEXXXXX"

So will wait and see what they say back, otherwise I might just have to find another seller, or else pay the VAT I guess.

Another seller might be the way, but if you end up suffering the VAT you can claim it back on a specific form (unsure of the name), just not on your regular VAT 3. Glad I could help!

Stratvs

jim o doom wrote: »

Another seller might be the way, but if you end up suffering the VAT you can claim it back on a specific form (unsure of the name), just not on your regular VAT 3. Glad I could help!

There's an electronic method now for doing this on ROS details are here

cormie

Cool, thanks everyone! That's handy about the Electronic method now. I do have a few VAT receipts from the UK each year, not much, but I'm always daunted by paperwork and I've just never gotten around to it. I was saving up some receipts to do it all at once at one stage, but then I found out that you're only allowed claim for the previous calendar year, so all the receipts I had from before that I think the chance to reclaim is lost now

cormie

Just on this again, does it matter whether the goods are collected by the buyer in the sellers country, or delivered to a mail forwarding address in the sellers country? I'm assuming as long as the buyers address is stated on the billing info, along with their vat number, then that's all the seller needs to not charge VAT?