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VAT and importing goods

A guide to VAT and imported goods.

If you are importing goods, you must ensure you are listed as the importer of record, this means you must have an EORI number and be listed on the customs documentation. Only by doing this can you reclaim VAT that has been charged on your imports. The process for becoming the importer of record can differ from country to country and to ensure you are setup correctly we advise contacting the tax authority for the country in question. You must be setup as the Importer of record before attempting to reclaim import VAT. 

Imported goods and declarations  

In Avalara Managed VAT Reporting imported goods refers to goods that are purchased from a supplier outside of the European Union. When the supplier ships the goods there may be import fees to pay. 

Import rules and fees vary from country to country, if you have a query related to import rules for a specific country, we advise you to contact the tax authority in that country. 

Importer of record 

In most countries in the EU the importer of record (IOR) must be established in the EU or have a physical presence in an EU member country. 

Companies that import to the UK don’t need to be established in the EU, but they will need an EORI number and a VAT number. 

EORI Number 

Businesses that wish to import from or export goods to countries outside of the EU will need an EORI (Economic Operator Registration and Identification) number. 

A business will only need one EORI number per legal entity and this number will be used across the EU. 

Click here to learn more about EORI, and how EORI works after Brexit.

Getting an EORI number 

To get an EORI number you will need to contact the local customs office, many of them will enable you to register for an EORI number online. The EORI number is usually requested from the EU country that the goods will arrive in, or the EU country that is exporting the goods. 

Avalara is able to request an EORI number on your behalf for a one off fee, please contact your returns manager if you are interested.

What is DDP?

Delivery duty paid (DDP) is a type of delivery agreement made between a buyer and a seller. 

When using a DDP agreement the seller assumes all responsibility for transporting goods to a destination agreed with the buyer. 

This means the seller must arrange all transport and cover any associated costs, including all required customs fees and documentation, VAT, sales tax, customs charges, and import duty. 

Selling under a DDP agreement can be preferable for your buyers, but you must remember that you are at risk of falling foul of VAT charges, storage costs and other associated fees that may be incurred during this process. 

Recording DDP

From 1 January 2021, anyone selling goods to consumers or businesses between the UK and EU will face  import VAT, potential tariff charges and customs declarations for the first time. These costs and associated paperwork can be passed on to your end customers. This will often come as a nasty surprise for them, and can result in long delivery delays. This can lead to unhappy customers and lost business as many customers will know in advance if you are passing delivery charges and import fees on to them.

The alternative is to record your sales to customers as Delivery Duty Paid, this means you have paid all delivery and customs fees on behalf of the customer, 

For more information visit our VAT Live page.

What is DAP?

Delivered At Place (DAP) Is a delivery agreement where the seller passes the costs and responsibilities for a cross border sale to the end customer.

under DAP, the buyer is ultimately responsible for not only the unloading, but the Customs clearance, duties, and taxes as well.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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