Does UK entity need to register for VAT in the EU?

Hi, we have the following business scenario - We are a UK business, with an EU (Germany) based parent. (1) our UK business receives a customer order from a multi-national customer (2) The UK business orders the goods from our EU based parent company (3) The EU based parent company delivers the goods direct to our customers branch located in the Netherlands. Do we have to pay VAT (@19%?) to our German parent company?....and if so, can we then claim back the VAT?...if not, can we firstly register for VAT in the EU and then claim back the VAT? Finally do we charge VAT on our sale to our UK customer, even though the goods are delivered direct by our parent to our customers location in the Netherlands? Please can anyone help to clarify, thanks.

I think you recognise that you probably need to register for German VAT. At stage (2), when UK orders the goods from German parent, does title/ownership shift from Germany to UK? In other words, is this sale recorded as a sale by the UK entity/UK turnover or is the sale recorded as a German sale/German turnover and the UK entity receives a commission from Germany for arranging the sale? As your later question asks about charging VAT on your UK invoice, it suggests you (UK) take ownership of the goods in Germany before they are shipped to Netherlands (else the Netherlands customer could just order directly from Germany and cut you out altogether). If UK takes ownership of the goods in Germany, then UK entity should be VAT registered in Germany, there would then be a domestic (Germany to Germany) sale between German parent and UK entity taking ownership of goods in Germany, then UK entity with ownership of German located goods would ask the German parent to ship the goods (owned now by the UK entity) to the customer in Netherlands, UK entity records that sale on their German VAT return (not the German parents VAT return, the UK entities German VAT return). Do you not have an Accountant or advisor in Germany to assist with this?

Thank you for the response - this is helpful. Ref step (2) yes title does pass from Germany to UK. Ref your final point - yes we have a Group tax team that can support, but just conscious some of these points are country specific.

Hi,

In this scenario the goods do not enter the UK and so the supplies will be ouitside the scope of UK VAT.

It is difficult for us to comment on transactions which occur in the EU. However, there are 2 supplies taking place and your company will be the owner of the goods in the EU for your sale to the customer in the Netherlands. This should require for yout to be registered for VAT either in Germany or the Netherlands. This will be determined by where the goods are when you make your sale to your customer.

If the sale takes place to you in Germany then you will be charged German VAT and there will be a requirement to register for VAT in Germany for your ongoing sale to the Netherlands.This should then allow you to recover the German VAT charged.

Alternatively, if you receive the goods in the Netheralnds then the German company should be making a zero rated EU cross border supply to you. You will then be making a domestic supply in the Netherlands and you will need to register for VAT in the Netherlands.

Thank you.