When a third country, meaning a country outside the European Union (EU), receives your goods, it may charge duty. A third country may also charge an equivalent of VAT or purchase tax.
You can usually zero-rate goods you are exporting out of the EU as long as you:
- Ensure they leave the EU within set time limits (typically three months).
- Keep satisfactory evidence of their departure.
- Hold sufficient evidence from your accounting records to prove that a transaction has taken place.
- Keep official evidence of export - either the Goods Departure Message for goods leaving the EU direct from the UK (direct exports) or, for goods leaving the EU via other member states (indirect exports), an Export Accompanying Document (EAD). The EAD must be stamped by customs in the last member state where the goods exit the EU - the Office of Exit.
Ultimately, the VAT treatment will depend on whether you're exporting the goods directly or indirectly, when you organise delivery and when your customer arranges collection.
Read more about exporting goods and services and VAT.
Separate rules apply to goods that are moved through EU countries to other EU countries.
VAT returns and Intrastat
Every business trading within the EU has to declare its sales on its VAT return. In addition, if your sales of goods exceed the applicable threshold during a calendar year, you will also have to submit Intrastat returns each month.
Intrastat thresholds are reviewed annually.
Common Agricultural Policy
For exports of agricultural goods and processed foods covered by the Common Agricultural Policy, you may be entitled to a refund or required to pay a levy. You may also have to apply for a licence to export certain goods above a defined quantity. Read more about exporting CAP goods.
Even if your customer is responsible for paying duty on the goods in the destination third country, you need to provide the right documentation. Third countries may have import duty regimes in place, but in some countries your exports may qualify for a reduced rate of duty or be classed as duty free. You'll need to provide evidence of the product's origin to claim the benefit. Read more about rules of origin.
The Integrated Tariff of the UK (the Tariff) is the official HMRC guide to importing and exporting taxes and duty. The Tariff contains the codes and customs requirements you need for import and export paperwork.
Ultimately, third country duties are based on the type of goods you're exporting, their origin and their value, all of which are subject to change in the destination countries. In addition to the Tariff, you can also check with UK Trade & Investment or the destination country about what taxes are to be paid and whether the exporter or importer is obliged to pay them.