Duty and VAT Implications on Export and Import

by Vidit Agarwal Marketing Director

Do you pay VAT and other taxes on import or export? Rules for import and export are complex and it is imperative than an individual or an organization involved in export and import activity understands them to avoid penalties. Any product or services before entering or leaving the country goes through custom clearance check and you need to pay any VAT and duty that is due before you can collect them. VAT and Duty implications depend on whether the goods are imported within the EU or a non-EU country.

Value Added Tax (VAT):

VAT is payable on the goods purchased from non-EU countries and special EU- territories such as Canary Islands. The VAT is not only paid on the price of the goods but on the total value of the good which also includes any duty charges that is due and need to be paid and insurance, postage and packaging cost. Please note you need to pay VAT on tobacco, perfume, alcohol or cologne irrespective what they worth but you don’t need to pay VAT on gifts worth more than £39.00 or on any other goods worth more than £15. It is not important to register for VAT to bring goods in but if you are not registered for VAT in UK, you won’t be able to defer, suspend or obtain relief from import VAT as input tax.

Acquisition Tax on Goods from EU Countries

Acquisition tax arises on goods and services which are brought in UK from other countries within the EU. If you’re registered for VAT and purchased goods from EU-countries, you can reclaim the VAT paid by filling output Vat on your VAT return to claim the amount as input VAT. VAT on goods and services imported from EU-Countries are accounted as acquisition tax. The VAT will be charged at the same rate that would apply to the product or service by the UK supplier. If you’re not register for VAT your supplier will charged VAT at the local rate of that EU country from which goods are supplied.

VAT on Goods from Abroad

If an individual or a business is receiving goods from outside the European Union (EU) they may be entitled to pay VAT, excise duty and custom duty. Excise duty is charged on excise goods imported from abroad such as tobacco, alcohol. Custom duty is levied on the value of the good that are purchased from outside EU countries. The VAT is paid at same rate that would have been paid if supplies were purchased from UK supplier. The VAT rate is reduced on imports of antiques, work of art, and collectors’ item. Import VAT certificate (form C79) showcase that VAT is paid.