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 Customs Administration of the Netherlands charges VAT over the value of the products, including any import duties. If the goods have UK preferential origin, no import duties apply.

Buying products from Northern Ireland

Northern Ireland has different rules from other countries 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 calculate your own Dutch VAT on the value of the stuff you sell and put it in your own VAT return.

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 Value Added Tax (VAT). Who pays this British VAT depends on your customer and the Incoterm® used. With the Incoterm® Delivered Duty Paid (DDP), for example, the seller is responsible for paying UK VAT. You can do this via a UK tax representative, or register yourself in the UK for VAT. Tax representatives can be found online with the keywords ‘VAT fiscal representative UK’. 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. On your Dutch invoice, you put 0% VAT. 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 defer paying the import VAT in the UK. The condition is that you often import goods into the UK. And that you are liable for VAT in the UK. You put the VAT you have to pay in your VAT declaration. The advantage is that you can deduct the VAT again. So you do not pay UK VAT in advance. This is called reverse charge VAT.

You must request permission for this reverse charge from HM Revenue & Customs (HMRC). This system is called 'postponed VAT accounting'. The system resembles the reverse charge mechanism in the Netherlands, 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.

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

Selling products to Northern Ireland

Do you sell products to Northern Ireland from the Netherlands? For VAT rules, it is the same as selling to an EU country. This is called an intra-community supply. You put 0% VAT on your invoice and your Northern Irish customer calculates the UK VAT.

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.

No Dutch VAT on invoice

Your UK business customer pays UK VAT for the services you provide. On your invoice, you do not put Dutch VAT. You use the text “VAT out of scope”. This indicates that Dutch VAT does not apply.

Providing services to Northern Ireland

For providing services in Northern Ireland, there is no exception for VAT as there is for supplying goods. You follow the VAT rules as set out above under “Providing services to the UK”.

Do you have questions about the VAT rules when doing business with the UK? Then contact the KVK Advice Team: 088 585 22 22.

Providing services in the Netherlands

Does your British customer come to the Netherlands and you supply the service here? Then you charge Dutch VAT. Your British customer can reclaim the Dutch VAT paid in the UK.

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 cannot 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.