UK Company buying goods in the EU and reselling in the EU B2B.

We are a UK based company which sells green coffee B2B. They way we are operating in the EU is buying the goods from an importer/warehouse based in Germany and selling it to our customers all over the EU. We've recently had some doubts from our customer's accountants who believe that a UK based company selling goods from Germany can be problematic. We were under the impression that we can operate in this way in Europe and that the Business customer has to self-account for VAT under the 'reverse charge' mechanism through their VAT return. Are we operating correctly or does VAT has to be declared in any way even though in most countries VAT for green coffee is zero rated?

The UK is no longer in the EU for over 4 years now. Unless you are based in Northern Ireland, the place of supply of goods is where the goods are at the time of sale. According to your description, you (UK entity) buys goods from a German supplier, that would suggest you take ownership of the coffee in Germany. Even if the goods remain at the suppliers German warehouse before being shipped, the ownership/title to the goods changes from German supplier to you (UK owner of the goods in Germany). You don't have to physically hold goods in your hand or your own warehouse to be the owner of them. The German supplier/warehouse may ship the goods to your EU customers but at the time these goods are shipped to EU customers, you (UK) own the goods and the German supplier is shipping your goods for you. As you are not a company in Germany, then there is a Nil VAT registration threshold meaning the UK entity had a requirement to register for German VAT from the very first sale made from Germany. Zero rate is still a rate of VAT even though the end effect is that no VAT is due or payable, zero rate is not "no VAT", VAT is being charged, just at 0%. When you sell from Germany to EU businesses, you are right that the EU customers then account for VAT under reverse charge, but that can only happen between two EU VAT registered entities, UK is not in the EU. If you only have a UK VAT number then your customers can still probably reverse charge - albeit wrongly - as the checks and triggers for errors will be on the senders side (your side), as you are not completing an EC Sales List in Germany (which is a requirement when making an inter-EU movement of goods and the UK don't have EC Sales List anymore since Brexit), eventually one of the EU tax offices will wonder why these EU businesses are reverse charging purchases of coffee but there being no corresponding EC Sales List to report the sellers/sales side. Technically, all these EU sales take place in Germany and are recorded on a German VAT return and not recorded on the UK VAT return.

Hi,

If you are buying the product in the EU and selling the goods in the EU then the sales are outside the scope of UK VAT as the goods are never in the UK.

If you sell goods within the EU and the goods move to another member state and the customer is VAT registsred in a different member state then the supply should be zero rated as a intra EU dispatch and the supply would be subject to acquisition tax in the member stare of destination.

We would recommend contacting the authorities in Germany regarding the requirements to register for VAT there.

Thank you.