In this section:
- Charging VAT on exports, despatches and movements of goods abroad
- Charging VAT on supplies of services abroad
- Paying and reclaiming VAT on imports and purchases from abroad
- Reduce the financial guarantees you provide for import duty and VAT
- Speed up the delivery of your imported goods into the UK
- Import VAT relief for goods supplied onward to another EU country
- Import VAT relief for goods originally exported for processing
- Foreign currency transactions and VAT
- Verify an EU VAT number on the European Commission website
- Check EU country VAT codes on the European Commission website
Import VAT relief for goods supplied onward to another EU country
Generally speaking, VAT is payable on all goods and services imported from outside the European Union (EU) at the same rate that would apply to the goods or services if supplied in the UK. However, in some circumstances you may be able to obtain relief from import VAT.
If you import goods from outside the EU specifically to forward them on to another European Union country, you are normally allowed to claim relief from the import VAT on these goods. This is known as Onward Supply Relief (OSR). The effect of using OSR is that import VAT is not paid anywhere in the UK, and supply VAT on the onward supply is accounted for in the country of destination.
If you import goods from outside the EU specifically to process them in some way before re-exporting them outside the EU, you may be able to claim relief from the import VAT on these goods. This is known as Inward Processing Relief (IPR). You need authorisation to use IPR.
This guide explains what transactions qualify for OSR and IPR, how these reliefs work, and how you can claim them.
On this page:
OSR
If you import goods from outside the EU, you normally have to pay VAT as if you had bought them in the UK. You must inform us about any goods that you import, and pay any VAT and duty that is due. However, if you import goods in order to forward them on to another EU country, you are normally allowed to claim relief from VAT on these goods - the VAT on the goods is accounted for in the country of destination. This is known as OSR.
OSR involves putting the goods into free circulation in the UK. This is done by paying any applicable customs duty in the UK, and using OSR to claim relief from the immediate payment of import VAT. VAT is then accounted for by the recipient of the goods in the final destination country.
You can use OSR if you are registered for VAT in the UK and you regularly import goods. Alternatively, you can use OSR if you are an agent registered for VAT in the UK and you have been appointed to act on behalf of an importer based in another country, who isn't registered for VAT in the UK.
Freight forwarding agents can also use OSR provided they are making a zero-rated supply of the imported goods, and not merely despatching them, to someone who is registered for VAT, and who will account for the tax on their acquisition, in another EU country.
External community transit procedure
If you import goods from outside the EU in order to forward them to another EU country, you may be able to use either OSR or the external community transit procedures (T1). If you use OSR, then customs duty is payable in the UK, and VAT is accounted for in the country of destination. If you use T1, then both duty and VAT are payable in the final destination country.
Find out which countries and territories are part of the UK in VAT Notice 703
Find out which countries and territories are included in the EU VAT area in VAT Notice 703
Conditions for claiming OSR
To claim OSR you must be a trader registered for VAT in the UK, who is making a zero-rated supply of goods to someone registered for VAT in another EU country.
The goods you despatch to another EU country must be exactly the same as the goods you imported. You cannot process or modify them in any way.
You must send the goods to another EU country within one month of the date of importation, ie the date when the goods entered free circulation. If you cannot meet this deadline you can apply to the National Import Reliefs Unit (NIRU) for an extension.
National Import Reliefs Unit
HM Revenue & Customs
Custom House
Killyhevlin Industrial Estate
Co Fermanagh
BT74 4EJ
Tel: 028 6632 2298
Fax: 028 6632 4018
Email
You need to include the goods on your EU sales lists, and you must record the EU trade figures on your VAT returns.
Find out more about making and accounting for zero-rated supplies of goods to another EU country
How to claim OSR
To claim OSR, you must enter the following in box 44 of form C88, the import SAD (Single Administrative Document):
- the expected place and date of onward consignment
- if known, the identity of the onward transport, ship, aircraft, vehicle, etc
- the name, address and VAT registration number of whoever you're sending the goods to in the EU country of destination
You must also enter the appropriate Customs Procedure Code (CPC) in box 37 of the import SAD. By using the CPC you are making a declaration that you:
- have met the conditions of the relief
- will produce, if asked by one of our officers, commercial evidence that the goods have been supplied onward to another EU country
- will pay on demand any import charges due if the conditions of the relief are not met
Read more about paying and reclaiming VAT on imports and purchases from abroad
More about importing goods in Customs Notice 501
CPCs
OSR can be claimed for:
- direct imports from third countries - the main use for the relief - using CPC 42 00 00
- returned goods using CPC 61 23 04
- imports from third territories, eg the Channel Islands, for free circulation using CPC 49 00 70
OSR may also be claimed by UK VAT-registered traders removing their goods from:
- inward processing (suspension) arrangements using CPC 42 51 00
- temporary importation arrangements using CPC 42 53 00
- free zones using CPC 42 78 00
- customs warehousing using CPC 42 71 00
Accounting for OSR in your records
To account for the goods in your records, you must raise a tax invoice to whoever you're supplying the goods to. This transaction must be recorded on EC Sales Lists.
Get more information about the EC Sales List including making corrections and filing it online
A summary of transactions must be recorded as EU trade figures on your VAT return. If required to do so, you must also complete Intrastat Supplementary Declarations as appropriate.
More about accounting for VAT in VAT Notice 725
More about completing Intrastat Supplementary Declarations in Customs Notice 60
IPR
Under IPR, you can get relief from duty on goods that are imported from outside the EU, processed in the EU and then re-exported - but only on condition that the trade does not harm those who produce similar goods in the EU. Processing can mean anything from repacking or sorting to the most complicated manufacturing.
You do not have to pay import VAT under IPR. It would only become due if the imported goods were diverted to free circulation in the EU. If this happens, import VAT is based on the value of the goods being diverted, including import duty, when they first entered the EU for processing. The rate used will be the rate that applies in the member state where the goods are going, on the date that the diversion takes place.
If you import goods for processing but then divert them to someone within the EU - rather than re-export them - you cannot claim OSR. However, you might be able to claim relief if the goods which you originally planned to process and re-export are diverted to free circulation in the UK, and you pay both customs duty and compensatory interest.
Authorisation
You don't have to be registered for VAT, but you do have to be authorised if you want to import or receive goods under IPR. Authorisations are issued to whoever processes the goods, or arranges for them to be processed on their behalf. If you sub-contract processing, the sub-contractor must hold their own authorisation, or be named on your authorisation.
