VAT On EU Sales

EC Sales List (ESL) & Sales To The EU

If you’re a VAT registered business in the UK supplying goods and services to VAT registered customers in another EU country, you must tell HM Revenue and Customs (HMRC) about those supplies.

Use an EC Sales List to show:

  • Details of each of your EU customers including their VAT number
  • The sterling value of the supplies you’ve made to them
  • The customer’s country code

Sales To EU and Non-EU Countries

If you sell, supply or transfer goods out of the UK to someone in another country you may need to charge VAT on them. Generally speaking, you can zero-rate supplies exported outside the European Union (EU), or sent to someone who’s registered for VAT in another EU country.

If you sell goods or services to someone in another EU country, who isn’t VAT registered, you charge VAT in the normal way. Sales to another country inside the EU are called ‘dispatches’ or ‘removals’. ‘Exports’ describe sales to a country outside the EU.

Sales To Entities VAT-Registered In Another EU Country

If you are selling goods to someone who is VAT registered in the destination EU country, you can zero-rate the supply for VAT purposes, if:

  • The goods are sent out of the UK to another EU country.
  • Whoever you’re sending them to is VAT registered in another EU country
  • You have their VAT registration number, including the 2 letter country code, and show it on your sales invoice
  • You have ‘evidence of removal’ showing that the goods have gone out of the UK
  • You dispatch the goods and get evidence of removal within 3 months
  • To account for the VAT on zero-rated sales to another EU country, include the value of the goods and services in your VAT return

Your ‘evidence of removal’ will include a number of things, such as:

  • Customer orders
  • Correspondence with customers
  • Sales invoices
  • Packing lists
  • Invoices from haulers
  • Bank statements
  • Consignment notes showing the goods have been received in another EU country

And must show:

  • Your business details
  • Your customer’s details
  • A detailed description of the goods and their value
  • The method of transport and route
  • Where the goods are going to
  • Evidence must be kept for 6 years, and HM Revenue and Customs can request to see it. If they believe it is unsatisfactory you may have to pay VAT on the goods or services sold. You can use an online interactive tool to check if a VAT number for an EU country is valid

Reporting Requirements For Zero-Rated EU Sales

All UK registered traders have to send list of their EU Sales to HMRC.
You have to tell HMRC about zero-rated EU sales on 3 different forms:

  • Your normal VAT return in box 6 and box 8
  • The EC Sales List (ESL)
  • The Intrastat Supplementary Declaration, if you sell over £325,000 of goods to other EU customers in a year

When To Complete An ESL

You’ll need to complete an ESL if you’ve:

  • Filled in Box 8 of your VAT return; HMRC will automatically send you an ESL to complete
  • Supplied any goods to a VAT- registered business in another EU country (this applies even if you didn’t invoice for them, unless they count as samples for VAT purposes)
  • Moved any of your own goods to a VAT registered branch, office or subsidiary company that you own in another EU country
  • Sold goods to a VAT registered customer in another EU Country and arranged for your supplier, who’s located in one EU Country, to send the goods directly to your client (this is called triangulation)

If you haven’t supplied goods or services to VAT registered customers in another EU country (or issued any credit notes) you will not be required to complete an ESL.

The Simplified ESL

If your business only makes low level supplies of goods to VAT registered customers in another EU country you may not need to fill in the full ESL. You can contact HMRC to ask if you can send a simplified annual ESL, if:

  • The value of your total taxable turnover in a year isn’t more than the VAT registration threshold plus £25,500
  • Your supplies to customers in other EU countries aren’t more than £11,000 a year
  • Your sales don’t include “New Means of Transport”

How To Send Your ESL

You can choose from:

  • ECSL – this is an on-screen form, similar to the paper ESL
  • ECSL ‘bulk upload’ feature as a CSV (Comma Separated Variable) or XML (Extensible Markup Language File)
  • ECSL via an XML Channel
  • UN-EDIFACT format submissions

Sending Your ESL On Paper

You can choose from:

  • Paper ESL form sent automatically by HMRC every month or quarter
  • Downloadable form VAT 101 EC Sales List and form VAT 101(A) EC Sales List Continuation Sheet

If you’re completing a form VAT 101(A) it must always be accompanied by a signed form VAT 101

When To Send Your ESL

Your Business Supplies

Value Of Supplies

Send Your ESL

Goods

Is over the £35,000 threshold in the current or 4 previous quarters

Every Month

Goods

Is under the £35,000 threshold in the current or 4 previous quarters

Every Month

Services that are subject to the reverse charge in the customer’s country

N/A

Monthly or Quarterly (Optional)

Goods and services where you are required to send monthly lists for your goods

N/A

Month for all the supplies or goods and quarter for services

If you make annual VAT returns you can contact HMRC to apply for approval to submit your ESL once a year provided you meet all of the following conditions:

  • Your total annual taxable turnover does not exceed £145,000
  • The annual value of your supplies to other EU countries is not more than £11,000
  • Your sales do not include New Means of Transport

Deadlines

You must send your ESLs:

  • Within 14 days for paper submissions
  • Within 21 days for online submissions

If you send the ESL in late, you may have to pay a penalty