Value Added Tax, or VAT, is a consumption tax assessed on the value added to goods and services. Its closest relative in the USA and China is the local Sales Tax.

It is chargeable once any company that provides rateable goods and services passes a pre-set VAT threshold.

In the UK, HMRC usually approve a VAT application completed by AVASK within a week. However, this can be extended to up to 2 or 3 weeks depending on their workload and the individual company circumstances.

For other European countries, the time taken for tax authorities to issue a VAT number differs from country to country.

Italy is the fastest with a number being issued within the week, whereas other countries such as France and Poland can take a few months.

We therefore advise thinking ahead in terms of your VAT requirements so that you are not caught out due to processing times of each tax authority.

VAT is calculated using the local rate for that country. For example, in the UK the rate is 20%, so if you had a sale of £10 excluding VAT, your gross sale price would, therefore, be £10 + £2 = £12

We recommend that you, therefore, mark your products up by at least 20% to cover the VAT element. This ensures that your customer is the one paying the VAT and you are effectively working as a tax collector on behalf of HMRC.

Saying this care must, of course, be taken when pricing your products so that you remain competitive within the marketplace.

AVASK has put together a list of the necessary documentation required. Get in touch with us to discover more.

Providing that you complete your business cycle of importing, selling and exporting all from the UK, all VAT matters can still be handled through the UK VAT system, even if you are sending to multiple EU countries. This is referred to as distance selling.

There are two scenarios there you would be required to register for VAT in additional EU countries:

Firstly, if you make a direct shipments to an EU country and then begin storing goods in that country. In this case you would also need to ensure you have the correct EORI number in order to clear your goods at customs, mainland Europe or UK EORI as required.

Secondly, if you have breached the relevant distance selling threshold then you will be required to declare sales based on arrival country and therefore hold a VAT account in the country of breach.

The EORI number - (Economic Operator Registration and Identification) is an EU initiative that helps traders communicate with customs officials when they are importing and exporting goods.

It is specific to your VAT number/your company and is used when clearing your goods at customs in European countries.

When we register your business for VAT, we will also apply for an EORI number for your business. This comes at no extra cost.

If you do not have an EORI number then your shipment will be held at customs until a valid number for your company can be provided, this will incur a day rate on the shipment held and therefore an issue you very much want to avoid.

Additionally, clearing a shipment with the incorrect EORI number will result in you being unable to claim the import VAT paid at customs that you are entitled to reclaim.

The content of the FAQ is for general information only and does not constitute any form of advice or recommendation upon which a specific decision should be made.

AVASK has done its best to ensure the accuracy but excludes any warranty expressed or implied to quality, accuracy, timeliness, completeness or fitness for particular purpose of this FAQ material.

AVASK will not be liable for any claims, penalties, loss, damages or expenses arising from the use or the inability to use the FAQ.