The Wholesale Forums

[JIMSLITA]

Hi there

I am doing some research to see whether a new supplier based in the UK will work out supplying us product in France.

Both parties are VAT registered in their respective countries.

I understand that the UK exporter does not have to charge the VAT on the goods leaving the country - but what happens on the French end? Is the total amount of VAT charged on the goods at the point of retail (or resale) owing to the French treasury or just the VAT on the profit?

Alternatively if the goods are bought by the french company from a non VAT registered UK company (or private individual) what difference, if any, will that make to the calcluations.

Sorry if this seems very obvious to you - but I have run myself in circles thinking about it!

Many thanks in advance

[greedyboy]

Sorry you lost me But then again it's nearly 6 and my brain is fried!

If both parties are VAT registered within the EU otherwise know as 'intracommunity supply' or 'intracommunity acquisition', no VAT is charged at the point of sale within EU states. It's one big market, the same as purchaing from your next-door neighbour (albeit your neighbour would charge you the VAT and you would claim it back using your VAT return).

If the seller is VAT registered and the other EU member state buyer isn't then the VAT charged at the point of sale becomes a cost.

If the seller is NOT VAT registered and the other EU member state buyer is, then the purchasing price is exactly as paid and obviously VAT is not claimed back or charged.

There is no VAT or duty charged for Intracommunity transactions.

NOW my brain is fried good and proper

[JIMSLITA]

Both paries are Vat registered in their country.

Example:

cost in the UK ex VAT 100
sale price in France 150 + 19.6% VAT
how much tax is due by the importer on the sale? 19.6 * 150 or 19.6 * 50?

[greedyboy]

Originally Posted by greedyboy

If both parties are VAT registered within the EU otherwise know as 'intracommunity supply' or 'intracommunity acquisition', no VAT is charged at the point of sale within EU states.

There is no VAT or duty charged for Intracommunity transactions.

So in your case, the UK seller does not charge you vat. You are not charged VAT or duty at the point of entry to France and you charge your local VAT as usual when you sell the goods. The VAT content you charge all goes to your countries treasury as normal without any deductions (as there are none).

The EU is one big happy trading family

[consultant]

if you are both registered and you have their VAT number, you do not have to charge VAT. That's all you need to worry about. What they pay (which is nothing) is not your issue to worry about!

[hardwareheroes]

The intra community system of nullifying the vat burden was designed to level the playing field and encourage trade between eu members. Its a good idea as many people were put off trading with partners who charged 19% VAT when they could only claim back 12% in their own country. The difference in VAT then bacame an additional overhead for the would-be importer.