VAT

Hi, My company is a UK VAT registered company, we are ordering goods valued over £135 from overseas factories for reselling. Case 1: I am going to order some goods from a factory in Spain for resell to a German company. The Spain factory issue an invoice with Spanish VAT included to my company and then send the goods to Germany directly. Can my company claim back the VAT paid? Case 2: I am going to order some goods from a factory in China for reselling to a UK company. The Chinese factory will issue invoice to my company on EXW term, I will arrange freight forwarder to pick up the goods from the factory, then the goods will be sent directly from China to my UK client (VAT registered). I am planning to offer 2 options to my client, may I know if both of the following will work? (a) The import VAT and custom will be billed to my UK client, then my company will issue a non-VAT invoice to client (b) The import VAT and custom be prepaid by my company first, then my company will issue a VAT invoice to client. Can I bill my client on the customs duties too? Thanks.

Hi ssku Case 1 . No you cannot claim overseas VAT on your UK VAT return. VAT is country specific so you should check the Spanish requirements. It may be the transaction creates a requirement to register for VAT in Spain/ the EU . Case 2 a) if your customer is the importer named on the import declaration then they will be responsible for the import duty and import VAT . Case 2b) if you are the named importer then you will be responsible for import VAT & duty. There is then a separate second transaction to make a domestic sale to your customer. If the customer is the importer and you pay on their behalf then it’s a commercial matter what you recharge them for. Please bear in mind only the importer is entitled to import vat recovery or to use postponed vat accounting.

Hi ssku,
In the first scenario the goods do not xcome in to the UK so are OutsideThe Scope Of UK VAT.
If the Spanish company are charging you Spanish VAT then they are deeming the supply to be in Spain and so are correct in charging Spanish VAT.
Your company will own the goods in Spain and will therefore be making a supply in the EU between Spain and Germany.
It is likely you will need to register for VAT is Spain to allow you to account for the VAT on your supply.As you are registered for VAT in Spain you would then be able to recover the VAT charged to you.
For the second scenario both of these options seem fine as in the first scenario your UK customer will be the importer of record and in the second option you will be the importer of record and thus making a UK taxable supply.
If you incur import duties in the UK then you can add the customs duties to your price before calculating the VAT.
Thank you.