• VAT on Imported Goods from China: A Complete Guide

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    Imported from Asia to the EU, or selling cross-border? In this guide, we explain what importers, Amazon sellers, and cross-border e-commerce companies must know about the Value Added Tax (VAT) in the European Union.

    We also collaborated with Alex Wyatt from SimplyVAT and Dr. Matthias Oldiges from KMLZ, two of Europes leading experts, to create this comprehensive VAT guide.

    This is covered

    • VAT calculations for European importers
    • VAT rates in EU member states
    • How and when to pay VAT
    • VAT registration for EU companies
    • VAT registration for non-EU companies
    • VAT when dropshipping products
    • VAT when selling products online within the EU
    • VAT registration when selling from overseas to the EU
    • VAT when selling on Amazon

    What is Value Added Tax (VAT)?

    The VAT is a consumption tax in the European Union. In B2C transactions, VAT is always included in the price. If you, for example, buy a product online from an EU based online store, the price you pay includes VAT.

    The seller can then subtract the VAT paid on imports, from VAT added on top of the sales price.

    Below follows an example:

    • Sales: $10,000 (Including VAT, 20%)
    • Expenses: $5,000 (Including VAT 20%)

    This allows us to make the following calculation.

    • Sales VAT: $2,000
    • Paid VAT: $1,000
    • Total: $2,000 – $1,000 = $1,000

    Thus, I would need to pay a VAT of $1,000. If I’d spent more on VAT than I added on top of my sales, I would instead get money back from the state.

    However, when importing goods from China, you can’t pay the VAT directly to the supplier. Simply because Chinese businesses belong to a different tax system, and are not VAT registered in the EU.

    When importing products, the same principle applies. If you pay more VAT on your imports than you add on your sale price, you’ll get a refund.

    VAT forms

    What is the customs value?

    As the VAT calculation is based on the customs value, you need to be familiar with this term to understand the examples provided in this article.

    In the European Union, the Customs Value is the total sum of the products (including development costs paid to the supplier) and shipping to the border.

    Below follows an overview:

    Always included in the customs value

    • Product cost (as paid to the supplier)
    • Insurance
    • Shipping cost to the Port of loading

    Sometimes included in the Customs Value

    • Tooling and molds
    • Product samples
    • Design services (and related development services) paid to the supplier in China

    Not included in the Customs Value

    • Transportation fees within the EU
    • Fees and services paid in the Port of Loading

    Do I need to pay VAT when importing from Asia to the EU?

    Yes, importers must pay VAT on top of the total sum of the Customs Value and the Import Duty.

    The VAT is paid to the state, in the country of entry and according to the local rate.

    If I import goods to Spain, I pay VAT in Spain, according to Spanish VAT rates. If I am based in the UK, I pay the UK rate, to the HMRC, and so on.

    How can I calculate the amount of VAT I must pay?

    Yes. However, before you can do that you must know the following factors:

    • Customs Value
    • Import Duty Rate
    • VAT Rate

    Below follows an example:

    • Customs Value: $10,000
    • Import Duty: 5% ($500)
    • Sum: $10,000 + $500 =$10,500
    • VAT Rate: 20% (UK Rate)
    • Total VAT: 20% x $10,500 = $2100
    • Total Amount: $10,500 + $2100 = $12,600

    How do I make sure I pay the right VAT amount?

    As mentioned, the VAT is calculated as a percentage of the customs value. As such, you have to ensure that the correct customs value is declared on the bill of lading, packing list, commercial invoice, and other relevant documents.

    Don’t assume that your supplier, or even forwarder, know how to calculate the customs value.

    Is the freight cost subject to VAT?

    Yes, in the European Union, the customs value includes the shipping costs up to the arrival in the port of destination.

    However, any logistics costs that arise within the EU, such as unloading and customs clearance, shall not be included in the customs value.

    That said, the forwarder will still add VAT on the invoice, but that is paid separately.

    Can I pay VAT to the Chinese supplier?

    No, you should not pay EU VAT to any non-EU entity, as they are not VAT registered in the European Union.

    Neither shall you pay China VAT, as the supplier in China receives a VAT refund when exporting products.

    What is the VAT rate in my country?

    So far, each EU member state sets its own VAT rate. Each state can also set different VAT rates for different products or services – or even implement exemptions (0% VAT).

    However, most products are taxed according to the standard VAT rate. You can find a full list here, or see the list below for a few EU states:

    • United Kingdom: 20%
    • Sweden: 25%
    • Italy. 22%
    • Germany: 19%
    • Netherlands: 21%
    • France: 20%

    When importing from China, how and when do I pay the VAT?

    There are two ways to pay VAT when importing goods from China:

    a. Pay VAT upon arrival in the Port of Destination

    Most Freight forwarders offer Customs clearance as a paid service. As such, they help you declare Customs duties and VAT to the local authorities.

    The Freight forwarder invoice the buyer for the total amount (Import duties and VAT).

    b. Declare the importation value on the quarterly or yearly VAT declaration form

    All VAT registered companies in the European Union must fill in a quarterly or yearly (sometimes even monthly) VAT declaration.

    In the VAT form, there are fields for declaring the total amount of Imported goods, from which the local tax authorities can calculate a VAT amount.

    The benefit is that the importer can then offset this amount directly from the amount of “sales VAT”.

    Do I need to get VAT registered before importing from China?

    This depends on the regulations in your country, as each EU member state set their own VAT rates and VAT registration rules.

    For example, in the United Kingdom, companies are only required to get VAT registered once they reach a certain yearly revenue (around GDP 80,000).

    However, UK companies must still pay VAT on imports from outside the EU, regardless of their revenue.

    Hence, we recommend that you get VAT registered in your country, and a third country in case you will import the goods to another EU member state.

    Can I deduct the VAT we’ve paid?

    Yes, the amount of VAT you pay on your imported goods can be subtracted to the amount of VAT you shall pay on top of your sales invoices.

    Example:

    Company A is based in the UK and imports products valued at $20,000 from a supplier in Hong Kong. During the first year, they only manage to sell goods valued at $15,000. This gives us the following:

    • Sales VAT: $15,000 x 20% = $3,000
    • Paid VAT: $20,000 x 20% = $4,000
    • Balance: $3,000 – $4,000 = -$1,000

    Given that they’ve already paid in more than the amount they are owed, Company A is eligible for a VAT refund. However, this may be reduced to zero in some cases.

    Do I need to pay VAT when buying product samples?

    Yes. There are two ways VAT can be paid when buying product samples:

    a. Upon arrival in the EU member state
    b. Declared as part of the Customs value of the first shipment

    Are there any exemptions for importers?

    Some EU member states set VAT thresholds between 10 euros to 22 euros. Hence, small sample orders may pass through without VAT being added.

    Do the Customs authorities add VAT to every shipment?

    No, it’s up to the importer to properly declare the value of the imported goods in the quarterly or yearly VAT declaration.

    Do you have more questions about VAT when importing from China to Europe?

    Write your questions in the comment form below, and we will add them to this article.

    Is the VAT rate set based on the origin country?

    Unlike duty rates, which can vary based on the country of origin, the EU VAT rate is fixed. As such, you’ll pay the same VAT on your imported products from China, as from Vietnam or the United States.

    We are based in the EU, and dropship products from China back to customers in Europe. Who pays the VAT in this case?

    Technically, the Importer shall pay the VAT. When you dropship products, your customer is the Importer, which therefore must pay VAT.

    In reality, however, the customs authorities don’t have resources to add import duties and VAT on the tens of millions of e-packets coming into the EU, from Aliexpress, Wish and other dropshippers each year.

    A likely scenario is that the tax authorities will go after dropshippers.

    VAT for E-commerce and Amazon Sellers in the EU: By SimplyVAT

    Alex Wyatt

    In the European Union, you must pay VAT on both the imported products and add VAT when selling to customers in various EU member states. Given that there are 28 EU member states, all with their own VAT rates and registration procedures, it can be mind-numbing to get a grip on how VAT actually works when importing products from Asia – and selling them in the EU.

    So, why not just ask an expert, such as Alex Wyatt at SimplyVAT?

    Said and done, we wrote a list of questions that cover all major VAT scenarios:

    a. Importing to Country A and selling in Country A

    b. Importing to Country A and selling in Country B

    c. Company in Country A, importing to Country B and selling to Country C

    d. Non-EU companies importing to, and selling in, an EU member state

    Alex, please tell us a bit about what you do at SimplyVAT

    After starting at SimplyVAT just over a year ago, I now lead the business development team in the UK and China.

    SimplyVAT helps e-commerce sellers VAT register and comply in all 28 EU countries and Canada. We provide our clients with a proactive approach to their VAT needs to help their businesses grow internationally, and sustainably.

    Say that I am based in the UK, and importing products to the UK. How and when do I pay VAT?

    If your company is based in the UK, and you are importing stock and holding products within the UK, there are a few things to take note.

    As a UK registered company, you do not have to VAT register until you have reached £85,000 turnover within a 12 month period. During this time, you do not charge VAT on your products nor can you reclaim import VAT. As a UK company, you will still be required to include corporation tax on profits in your margins.

    You can also voluntarily VAT register before you have reached £85,000. Once VAT registered, there are two types of VAT you should be aware of:

    • Sales VAT
    • Import VAT
    Sales VAT

    There are 3 different rates of VAT in the UK: standard rated, reduced rated, and zero-rated. It is important to look into your specific products to ensure you are charging the correct VAT rate on your products.

    In the case that your products are standard rated, you will include 20% VAT in the price listed online. Within the EU, VAT is not included on check-out and should be included in your margins shown on the sale price.

    Import VAT

    Import VAT is paid on the cost value of the goods and is based on the country you are importing into in order for your goods to clear customs.

    For example, in the UK, you would pay 20% import VAT and if you are VAT registered, you can reclaim the import VAT paid when filing your VAT return. This means that your import VAT is offset against the sales VAT on your VAT return. If you have greater import VAT than sales VAT, you will receive money back from the Tax Authorities.

    If you have greater sales VAT than import VAT, your import VAT will be deducted from the money you’ve collected on sales VAT, meaning you only give the total of Sales VAT minus Import VAT.

    What if I am based in the UK, but want to ship to (and distribute from) Germany. How do I pay VAT in this case?

    In general across the EU, holding stock in an EU country triggers an automatic obligation to VAT register. This means if you are moving your stock into a German fulfilment centre, you must VAT register before moving your stock into Germany. The same applies in all 28 EU countries – holding your stock in an EU country creates a taxable supply and should be taxed under the local VAT rate.

    All products sold from the German VAT number (whether it be standard or reduced rated) will be paid to the German Tax Authorities after the VAT return is filed monthly.

    One company can have multiple VAT registrations across the EU. It does not matter if your company is based outside the EU or within the EU. It is important to understand that your company is liable to be VAT registered in each EU country where you hold your stock and/or where you surpass the distance selling thresholds.

    Importing into Germany

    There are many ways you can import into Germany and your VAT obligations come from the country where you are importing from.

    For example, if you are importing your goods from outside the EU into Germany, you will pay import VAT – which you can claim back when you file your VAT return.

    If you are importing your goods from another EU country, such as the UK, there are additional reporting obligations that must be filed to document the movement of the taxable supply from one EU country to another.

    These are called EC Sales Lists and are filed in the outbound country. Additionally, once your Intracommunity movements and sales reach specific arrivals and dispatches thresholds, you will also be required to file monthly Intrastat reports.

    Exporting From Germany

    All EU countries are governed by the Distance Selling Rules. These are when you are holding stock in one EU country, and selling directly to private customers in another EU country.

    You will charge the VAT rate where your products are being held until set thresholds are reached. Each country has its own threshold. For example, France, Italy, and Spain are all €35,000; Germany, the Netherlands, and Luxembourg are €100,000; and in the UK it is £70,000. Once you reach the threshold within a calendar year, you must VAT register in that specific country.

    For example, if you are selling from Germany into Spain, you will include Germany’s VAT rate and pay the German tax authorities until you have reached €35,000 worth of sales in Spain within a calendar year.

    Which VAT rate applies if I sell from my country to another EU country?

    As stated above, you are governed by the distance selling rules until you have reached the inbound country’s specific threshold. Before reaching the threshold, you are applying the VAT rate in the outbound country (where the stock is being held).

    After the threshold has been passed in a specific country, you must VAT register in that country, and begin applying the local VAT rate for your product.

    Does this mean that I need to pay VAT in each and every country I sell to?

    Yes, you do. Unfortunately, the VAT system is not centralised. You must declare your sales in each country where you are VAT registered. This differs if you are selling digital services so please make sure to ask this applies to you.

    The difference with digital services is that these come under VAT MOSS where the VAT rate is dependent on where the customer is based. Only one VAT registration is required for the provider of the digital service and collects the VAT from where the customer is based. Once a return is filed, the VAT is paid to one tax authority to later be divided between the tax authorities.

    What about overseas (non-EU) companies. Do they need to add VAT when selling to the EU, even if their stock is not there?

    If you are not holding stock within the EU, you do not require a VAT registration. If you are importing directly to the customer, and the importer of record is listed as the customer, you will not be required to pay any VAT or be VAT registered.

    In this case, the customer will have to pay any import duties in order to receive their product so it is best to be transparent about the added costs.

    Otherwise, you are able to become the importer of record and voluntarily VAT register. Once you are VAT registered, all products must include VAT in the sales price unless they have been approved to be exempt by the specific tax authority.

    What if an overseas (non-EU) company wants to sell on Amazon.de, using a local fulfillment center. Hence, they must import the products to the EU before selling. How do they pay VAT?

    Before moving your products into the EU – and in this example, Germany – you must be VAT registered. Once you are VAT registered, you will apply the VAT rate in your sale price and collect the VAT on behalf of the government.

    Then, a VAT return must be filed (in Germany it is monthly) where you declare your total sales and imports. Once the return if filed, you will pay the government the amount specified on the return.

    When looking at import VAT, your freight forwarder should help you pay the import taxes in order to clear customs.

    Can non-EU company import products and pay VAT without an EU entity or do I need to register a company?

    Yes, you can!

    As stated above, you can import and pay VAT without having an EU entity.

    One thing to note is that as a non-EU company, specific EU countries require a Fiscal Representative in order to VAT register.

    Fiscal Representatives are jointly and severally liable for the VAT owed by a non-EU company. Typically this will mean extra fees and bank guarantees when operating in countries such as France, Italy, Spain, Poland, and many more.

    So, how do I find a Fiscal Representative in the European Union?

    You can do your own research to find fiscal representatives in each country you require, or you can use a tax agency, such as ourselves, who has relationships with many local fiscal representatives and will keep all correspondence in one location.

    Thank you Alex. How can our readers learn more about your services?

    I hope this article has cleared up a bit of the mystery behind international VAT. SimplyVAT is always available to help answer questions and provide a fully managed VAT service including VAT registration, return filing, and an all-inclusive software. Visit www.simplyvat.com or email heretohelp@simplyvat.com to speak to one of the team members!

    EU VAT Registration for American and Asian Importers: By KMLZ

    Matthias Oldiges

    Businesses in the US and Asia importing or selling products to the European Union must get their act together when it comes to Value Added Tax (VAT). Yet, understanding how to register and pay VAT, as a non-European company, is complicated.

    As such, we decided to ask one of the Europes leading VAT experts, Dr. Matthias Oldiges – Managing Associate at KMLZ (Küffner, Maunz, Langer and Zugmaier) in Munich.

    These topics are covered:

    1. VAT when selling cross-border (B2C) to customers in the European Union as a non-EU company

    2. VAT when importing into the European Union (i.e., Amazon FBA) as a non-EU company

    3. VAT threshold in different EU states

    4. How to get VAT registered as a non-EU company

    5. How to pay VAT as a non-EU company

    Matthias, how did you end up working for KMLZ?

    You can know something about everything or know a lot about something. KMLZ decided on the latter and concentrated on VAT law, customs law and criminal law. I wrote my doctoral thesis on a VAT legal topic.

    This ultimately led me to KMLZ, where I have now been working as a lawyer (Managing Associate) for almost six years. We advise our clients on VAT and customs law-related matters within Europe, as well as worldwide.

    Our strong network of experienced and leading VAT experts, in all Member States of the European Union and beyond, enables us to provide our clients with international advice at the highest levels.

    Let’s say that a US or Asian company want to sell cross-border (B2C) into the EU, do they need to get VAT registered?

    This depends on the individual case. The answer to the question of who is liable for import VAT is decisive. The person who lodges a customs declaration is liable for import VAT. Therefore, it is very important that the seller and the customer agree on this question in the purchase agreement (e.g. [Website] Terms & Conditions).

    The purchase agreement should cover the question of which party (seller or customer) is responsible to lodge the customs declaration in the EU Member State of importation. In this context, please see the following scenarios:

    If the US or Asian company (or their respective agent) lodges the customs declaration in the EU, the US or Asian company (or their respective agent) is liable for import VAT in the relevant EU Member State.

    The sale to the customer is deemed to be within the scope of VAT in the customer’s EU Member State.

    In this case, the US or Asian company is required to register for VAT purposes in the customer’s EU Member State and to declare the sale in the VAT return of the Member State of importation.

    However, the US or Asian company can avoid the need for VAT registration in the EU Member State of importation. This is the case if the parties agree that the customer is responsible to lodge the customs declaration in the EU Member State of importation.

    In this case, the customer is liable for import VAT in the said EU Member State. Consequently, there is no seller’s obligation to register in the EU Member State for VAT purposes.

    Now, let’s assume that I want to import goods into an EU country, and sell on Amazon.com. I guess this requires VAT registration?

    Yes. Normally, you can import goods into an EU Member State and store them in an Amazon fulfillment center.

    In order to be able to be placed in a customs procedure, the non-Union goods must be presented to customs. The presented goods are then declared for a customs procedure. A customs declaration must be submitted in order for this to take place.

    This is regularly submitted electronically using the ATLAS system for electronic customs clearance, and will be until such time as a uniform IT system for the whole of the European Union is in place. Declaration formalities must be carried out by a company registered in the EU.

    Submission of the customs declaration by a representative, such as a forwarding agent, is permitted. Companies from non-EU countries are allowed to submit a customs declaration only in very limited cases.

    The importation is subject to import VAT in Europe. However, you can deduct the import VAT in your VAT return. Therefore, in general, the importation is neutral from a cash perspective.

    The subsequent sale to the customer is within the scope of VAT in the EU and, therefore, requires a VAT registration in the EU. The subsequent sale to the customer is taxable with local VAT if it constitutes a local supply of goods in the customer’s Member State.

    You have to invoice the customer with local VAT. Moreover, you must declare the sale in your VAT return and must pay the relevant VAT amount to the local tax authority.

    Say that I import and store products in, for example, the Netherlands – but sell online EU wide from there. Is it enough to get VAT registered in the Netherlands only?

    This depends on the individual case. If you only sell B2B, you do not need to register in any EU Member States other than [in this specific example] the Netherlands.

    However, in the case of B2C, you need to register in the EU Member State of the customer if your sales exceed a specific [yearly] threshold.

    Thresholds, between EUR 35.000–100.000, exist for every EU Member State.

    If your sales to a particular EU Member State exceed the relevant threshold, you will need to register for VAT purposes in that EU Member State. Otherwise, if your sales do not exceed the threshold, it is sufficient to be registered in the Netherlands only.

    Is it possible, as a non-EU company, to get VAT registered EU wide?

    Unfortunately, this is not possible. You are required to apply for VAT registration in every single EU Member State. However, the application procedure is quite similar.

    Once I know where to register, how do I actually get VAT registered as a non-EU company?

    VAT registration is a very formalistic procedure. It usually includes the identification of the competent tax authority, preparation of the required documentation and responding to follow-up questions by the tax authority.

    The company registering is required to complete a standard form provided by the tax office and, usually, an additional questionnaire.

    The questions contained in the latter relate to the company’s business activities and its VAT treatment. In general, the tax authority provides all necessary information for foreign companies on their website.

    Okay, so how long does it take to get VAT registered from overseas?

    It very much depends on the individual tax office. The registration procedure can take up to 10 weeks. You can generally say that the registration procedure is probably faster when the application is managed by a contact person in the EU.

    How do I pay VAT to so many different countries at a time?

    Well, if the foreign company provides all necessary documentation and clarifies all follow-up questions, the tax authority will grant a tax number.

    The registered company is obliged to file its VAT returns under its tax number. In general, the company has to file electronic VAT returns on a monthly basis. If the VAT return results in a liability to make a payment, this payment has to be made to the responsible tax office in every EU Member State.

    There is no EU-wide VAT transfer between the EU Member States. However, German tax offices allow direct debit.

    Do I need a bank account in the EU to pay VAT?

    No, a non-EU bank account is sufficient.

    Thank you. How can KMLZ help non-EU companies to solve this VAT riddle?

    We offer coordination of VAT registration at the relevant tax office, as well as the filing of all relevant VAT returns in Germany and all other EU Member States, from a single source.

    Due to our existing contacts and good relations with the tax authorities, we can guarantee the fastest possible registration and compliance with VAT declaration obligations in Germany and all other EU Member States.

    Especially in Germany, operators of electronic marketplaces, such as Amazon and eBay, are increasingly becoming the focus of the tax authorities. Operators of electronic marketplaces must provide the tax authorities with proof of their Chinese traders’ VAT registration.

    Otherwise, the Chinese traders will be excluded from trading on the electronic marketplaces in Germany as from 1 January 2019, at the latest.

    Therefore, all relevant traders, who are not yet registered for VAT, must apply for their registration as soon as possible.

    A Chinese company doing business in Germany must obtain registration in Berlin-Neukölln. Due to our existing contacts and good relations with the tax office in Berlin-Neukölln, we can guarantee a fast registration process and compliance with VAT declaration obligations.

    We are very happy to and in a unique position to assist in this regard! Please find this link for more information about our services.

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  • 92 Responses to “VAT on Imported Goods from China: A Complete Guide

    1. RICHARD at 6:49 pm

      Hi,

      I am not VAT registered as I have not reached the threshold of £58K

      However, as I understand it, I will require an EORI number instead.

      Will this be acceptable to China suppliers?

      Can someone clarify this, please?

      Many Thanks

      Richard

      1. Fredrik Gronkvist at 11:00 am

        Hi Richard,

        Not sure what you mean by “will this be acceptable to China suppliers”?

    2. Phil Robins at 6:18 am

      Great blog – if a vat registered Irish company sells b2b to a German vat registered company, they cancel out sales vat right? So none is charged but then dropship from a supplier in China – will the German company then have to pay the import duty? Or do we need the Chinese supplier to ship to the Irish buyer to pay the import vat and then send it on to Germany. Can the Irish company pay the import vat on entry in Germany and then claim it back even though no sales vat has been applied?

      Tia

      1. Fredrik Gronkvist at 11:34 am

        Hi Tia,

        I suggest you contact a VAT specialist like simplyVAT.com

    3. John at 8:23 pm

      Hi,

      I have a strange question I think. my company is registered in the U.K and our offices are located in Northern Ireland.
      With us being in Northern Ireland we come under the Northern Ireland Protocol since the UK left the EU.
      1. As my company is registerd in the UK does my company fall under the Protocol for trade with EU member states due to our offices being located in Northern Ireland?
      2. We now have taken on a distributor for our products based in Italy. All goods will ship directly from factory in China to the distributor in Italy, do i charge VAT to them as the goods will be imported direct to Italy by the distributor?

      Thank you in advantage.
      John

      1. Fredrik Gronkvist at 12:05 pm

        Hello John,

        I am not qualified to answer these questions but you might want to check with SimplyVAT.com. They might know.

    4. Ragul Chandrasekaran at 6:04 pm

      My company Registered in the Netherlands for dropshipping business?

      Should I deliver only to NON-EU Country? For less VAT, compliance
      or Should I go with worldwide shipping? Which one do you recommend and why?

      If I market only to NON -EU, I can sell without any VAT until threshold limit?

    5. Ragul Chandrasekaran at 5:53 pm

      Your question or suggestion: I’m currently in the planning stage to start a Dropshipping in the Netherlands. However, I have some questions mainly on Customs, VAT, and Tax. 1. Firstly, the prospective supplier is outside the EU, mainly located in Asian countries who will be directly sending products to customers. I expect most of the sales(approx 80%) would come from outside EU. I would like to know how should I charge VAT and other rates when the supplier and customer are outside the EU. 2. In the second situation, advise me on charging vat customs for when goods shipped inside EU. 3. In case, suppliers and customers are within the EU. How should I charge? Looking forward to your advice on the query to have a smooth startup for new business.

    6. Grace Grace at 6:21 am

      Hi
      Am a dropshipper
      Am in the uk but sell on Amazon Germany
      I dropship from china to Germany
      Do I need to pay vat for the items

      1. Fredrik Gronkvist at 6:42 pm

        Hi Grace,

        My understanding is that your customer will pay VAT as they are the ones importing the product.

    7. Giannis at 8:45 pm

      How about a mail forwarding service? We are a Cyprus registered business (and VAT registered in Cyprus) with a supplier in China. We want to use a mail forwarding service in UK. We do not hold any stock in EU. We will only import a package from China (sent by Chinese company) to UK mail forwarding company who will then send that package to the customer in UK (or anywhere else in the EU.) Who will pay the VAT in this case? And who will do the importing? Is it better for our VAT registered company to do the importing in UK or the Chinese? I guess it is our’s because we can then get that VAT deducted from the VAT on sales right? But how can we declare that we are the importers in UK when a Chinese company is sending out the package and a UK company is receiving it? (The one offering the mail forwarding services.)

      Thank you for such a thorough article! I will be contacting SimplyVAT for help in selling within EU also since we will be selling on Amazon.co.uk and eBay.co.uk

      1. Fredrik Gronkvist at 5:08 pm

        Hi Giannis,

        Will your company be registered on the address of the mail forwarding service?

    8. Talha at 2:16 am

      Hi,

      I am a resident in Germany and I’ll be importing goods from China to Germany’s Amazon fulfillment centers. I am only an individual and not registered as a company. Do I require a import VAT number along with an EORI number?
      I already have a tax identification number as a resident, will an import VAT number be different to that?

      Also, how is the supplier supposed to mention these numbers(invoice?) so they will be acknowledged when my goods are imported(via sea).

      1. Fredrik Gronkvist at 8:01 pm

        Hi Talha,

        You will need to pay VAT on imports with or without a VAT number. But, I think you need a VAT number to deduct the “import VAT” from the “sales VAT”.

        Further, EORI is not related to VAT as far as I know, but you need an EORI number to import goods into the EU.

    9. Mandy at 10:35 am

      Hi Fred,
      We are a Chinese supplier. Could you help with our question on VAT return in Spain?
      We export our goods to spain first, we pay all taxes, the good then will be stored in our warehouse in spain. Before we ship them to UK where our customer is located, there will be inspection and the failed goods will be scraped in Spain.
      There is no problem we get VAT return for the sold goods. The question is for the scraped ones, can we get the VAT return, and how?

      1. Fredrik Gronkvist at 5:02 pm

        Hi Mandy,

        I suggest you get in touch with SimplyVAT. They can probably help you.

    10. Jennifer Victoriano at 4:53 pm

      Hi Fred,
      Your blog is really helpful and good thing I saw your blog accidentally.. Well I have few questions I hope you can answer me. 1. I am importing goods from China it is actually personal gym equipment not for business purpose.
      it is has a total cost of £1000 the shipping cost is not included. How I will settle the VAT.
      2. Do I need a VAT register or account?? if Yes How?
      3. What are the requirements in customs to clear my imports.

      Thank you advance for answering my queries..

      1. Fredrik Gronkvist at 8:34 pm

        Hi Jennifer,

        No, I don’t think you need to get VAT registered. The air courier company (for example DHL) will charge VAT when they deliver the products.

    11. Mike at 10:21 pm

      Hi Fredrik
      Great article, I am planning to import some tiles from China, to use on a new build. Normally any building supplies are charged VAT and this is then reclaimed at the finish.
      The builder I am using is VAT registered, would he still have to pay the VAT on the goods on it’s arrival or would it be exempt?

      1. Fredrik Gronkvist at 8:11 pm

        Hi Mike,

        If they import the tiles directly from China they will have to pay VAT. This VAT can, however, be deducted from the sales VAT.

    12. Alex at 7:36 pm

      Hello, thank you for you article and the up-to-date comment responses, I have a slightly different question here:

      I’m open a company in UK (Chinese franchise) and the franchise have given me all the kitchen equipment. (Costs around £5000. Will I even need to pay VAT and customs TAX?

      I’m not reselling any product. The equipment that I mean to receive is just fridges, cabinets and some water boilers. Everything is just for in-business, not for sale. And if I do have to pay tax is there anyway that the customs will not check or add he VAT? Or is it 100% sure that they will add the VAT and tax.

      And Thank You Very much for your time. 🙏

      1. Fredrik Gronkvist at 7:25 pm

        Hi Alex,

        I am not sure, but I still think you are required to buy the products, and therefore the correct value must be stated. It doesn’t matter if you import for your own use, you must still pay import duties and VAT.

    13. Jack at 4:53 pm

      Thanks Fredrik
      If I am to pay import VAT to HMRC, for imports from China, who will send me a bill?
      This is the question I asked at the beginning.
      Thanks
      Jack

      1. Fredrik Gronkvist at 5:03 pm

        Hello Jack,

        There is no bill, unless you ask your forwarder to do it for you. In most EU countries, the business files a VAT declaration every or every three months.

    14. Ken at 7:43 pm

      Hi, How long will it take for me to get an international VAT registration number?

      1. Fredrik Gronkvist at 5:05 pm

        Hello Ken,

        I am not aware of any international VAT number. Are you referring to VAT registration in other EU states?

    15. PERE at 6:02 pm

      Hi, I’m importing from China raw materials and my chinese supplier puts the chineses VAT on the invoice, even though it’s a B2B operation from china to Spain. He says that this VAT has no refund possible, so these goods are 16% more expensive, because I’ve got to pay the chinese VAT without refund. Is this right?. Thanks in advance. Cheers

      1. Fredrik Gronkvist at 7:04 pm

        Hi Pere,

        That doesn’t sound right. However, if they don’t have an export license then they must add the China VAT.

    16. Jack at 6:47 pm

      Hi
      We are just VAT registered and buying from AliExpress, delivered directly to our own storage facility in the UK.
      How do we get a VAT invoice to claim the VAT back, and have a document to show a VAT inspector.
      Thanks.

      1. Fredrik Gronkvist at 6:38 pm

        Hi Jack,

        You don’t get a VAT invoice from the supplier. You pay VAT to the HMRC when you import the goods into the UK. This can then be deducted from the “sales VAT” within the UK and EU.

        Notice that the Chinese VAT system is completely separate from the EU VAT system.

        1. Jack at 7:16 pm

          Thanks Fredrik,
          Where do I get a VAT invoice from to have a document to show a VAT insprector?
          Thanks.

          1. Fredrik Gronkvist at 7:11 pm

            Hi Jack,

            VAT invoice from the supplier? What VAT inspector are you referring to?

            1. Jack at 7:05 pm

              Hi Fredrik
              In the UK, to claim VAT on purchases, input tax, we need a valid VAT invoice. If VAT is charged on imports, where do we get the invoice from?
              Every 2 or 3 years a HMRC VAT Inspector visits business premises to check the paperwork – ie. the VAT invoices. It won’t be good if we have nothing to show them, they will turn away all our claims.
              Jack

            2. Fredrik Gronkvist at 6:31 pm

              Hi Jack,

              The “import VAT” is not paid to the supplier, but directly HMRC when importing from outside the EU. If you buy from a supplier in the EU, however, you get an invoice that also includes VAT.

        2. Adam at 8:17 pm

          If I import US$20,000 worth of goods from CHINA and pay 20% VAT at the point of entry into the UK, can I claim the full 20% back from HMRC as part of my VAT return? I will be selling he goods to my distributor and charging them 20% VAT.

          1. Fredrik Gronkvist at 8:21 pm

            Hi Adam,

            Yes, that is how I understand it. It’s the same as when you pay VAT on invoices from suppliers within the UK and EU.

    17. Bob Andrews at 2:20 pm

      Hi we have set up a drop shipping business selling clothes (adult and vatable) these will be made in China and shipped to various countries around the world. Not shipping to UK first.
      Our business is a UK registered one and is VAT registered. The goods are not going to come into the UK unless someone buys them.
      1. If a customer in the Uk buys the clothes do they pay the VAT or should I account that my price includes vat in the UK.
      2. We will ship to EU, China, ME, Aus, US and Canada. Any issues with VAT in UK which may arise from sending to these areas? I am aware if I sell over certain limits I will have to register for VAT.

      Thank you.

      1. Fredrik Gronkvist at 6:25 pm

        Hi Bob,

        1. UK customers will need to pay VAT when they receive the goods. Dropshipping into your own country is risky, and something I don’t recommend.

        2. The UK is, at the time of writing, part of the EU VAT system. Nobody knows for sure what will happen after Brexit. As for the other markets, they don’t have VAT but there is, for example, a GST in Australia that foreign sellers must pay if they reach a certain threshold.

    18. Zifeng at 1:15 pm

      Hi, we are shipping to amazon FBA in the uk directly from China via the seller’s DHL account (incoterms DDP). We haven’t received any notice to pay for VAT and neither has the Chinese company. What happens in this case?

      Thanks!

      1. Ivan Malloci at 6:04 pm

        Hi there, if you buy in DDP via DHL, DHL shall pay the VAT, and then you refund them. I suggest you get in touch with DHL, in this case

    19. Michael at 6:00 pm

      Hi , if a Chinese seller is based in China and they import goods to the UK to sell on Amazon UK ( FBA ) do they have to pay 20% VAT the same as someone who is based in the UK and importing from China ?

      1. Ivan Malloci at 12:27 pm

        Hi Micheal

        yes, I think you must pay VAT even if you aren’t a UK based company

      2. Fredrik Gronkvist at 4:52 pm

        Yes, the Chinese seller must then setup a company in the UK to act as the importer of record. You cannot avoid the requirement to pay VAT.

    20. Jonathan Hand at 10:28 am

      Hi – My UK-based company is VAT registered but we will also be shipping direct from China to VAT-registered businesses in other EU states. Should we be paying the import VAT (and if so how will we reclaim) or is it better to ask the customer to pay the import VAT?
      Thanks

      1. Fredrik Gronkvist at 12:22 pm

        Hi Jonathan,

        That depends. Will the goods be imported into the EU by your customers, or via your company?

    21. Romeo Del Guasta at 11:58 am

      Hi my name is Romeo
      At the end of this article I for sure understood much more things. But I have still few questions.
      1- if the china supplier gives me the goods via Fedex or airplane, there is possibility I have to pay VAT immediately?
      2- how I choose when to give the VAT report? I would like every year.
      3- I have now a company registered in Denmark. How do I get VAT registered in DK, all EU, and US? This operation has a cost?

      Thank you very much.

      1. Ivan Malloci at 4:13 am

        Hello Romeo,

        1. There is a way to pay VAT and duty customs to your freight forwarder: you have to ask for a Incoterms DDP (Duty Delivered Paid)

        2 and 3. This are questions for your accountant, in your country.

    22. Cui Yuan at 3:43 am

      What a Great article.

      We’re a business based in Hong Kong which plans to sell goods imported from HK to Germany via online.

      Can we do this even if we’re not VAT registered or we need to become a vat registered first before importing?

      Thanks.

      1. Ivan Malloci at 8:49 am

        Hi there,

        in principle, if you selling to consumers you shall charge VAT, no matter where you company is registered. However, this is a complex matter and we recommend to discuss it with your accountant

      2. Fredrik Gronkvist at 8:03 am

        I think it’s possible for non-EU companies to get VAT registered. I suggest you reach out to SimplyVAT.com.

    23. Marc at 9:26 am

      Unfortunately the calculation in the first example is not correct:
      The amount included VAT (20% in the example) and the VAT is being paid on the net amount, so the calculation for the VAT in 10.000 is:
      10.000 = 1,2*X (X is the amount without VAT)
      Solving for X, we get:
      10.000/1,2 = X
      X= 8.333,33
      The VAT is calculated as: 8.333,33*0,2=1.666,67
      The VAT in 5.000 of goods bought is hence 833,33.
      The VAT that has to be paid to the tax authorities is therefore: 1666,67-833,33=833,34
      Easier calculation:
      10.000-5.000=5.000
      5.000/1,2*0,2=833,34

    24. Mahamed at 1:32 pm

      Hi,

      I am a UK based business which plans to sell goods imported from China to Germany via online. I would like to know if I would need to become vat registered in Germany as a result. If I do need to become registered am I able to reclaim any input vat that incur in the UK from the German government?

    25. Mirela Simonet at 10:26 am

      Hello,the article was very informative.I need a bit of help as I am a novice at importing. I am bringing bycicles at total cost of 2400 USD to Bulgaria as an individual.Do you have an idea what my clearing,duty,vat costs will be

      1. Ivan Malloci at 1:59 am

        Hello Mirela,

        what we know it’s written in the article. We can help you with the calculation, however we can’t do it free of charge. The consulting is included in our starter package: http://www.chinaimportal.com/all-categories

    26. Marcus at 10:58 am

      Hi Frederick
      I will have a UK Limited company. If I wish to import goods from Chinese manufacturer and have them delivered directly to my distributor in Ireland, and the distributor will pay me for the goods, do I register for VAT and pay/reclaim VAT in Ireland. Does this transaction have no impact from a UK VAT perspective and the distributor is responsible for his own sales and purchase VAT.

      1. Fredrik Gronkvist at 10:20 am

        Hi Marcus,

        Based on my understanding, they should pay VAT in Ireland on this transaction, assuming they are buying the goods from you.

        You may need to register for VAT in Ireland. This I am not sure of.

    27. Dave James at 2:18 pm

      Was going to import some equipment from China… but with all these extra charges it’s just not worth it. What a load of hassle and cost (plus about 25%). Forget it.

      1. Fredrik Gronkvist at 7:59 am

        Hi Dave,

        It never makes sense to import products from China, if it’s only for a single project.

    28. amber at 4:34 pm

      Hello Fredrik!
      I am importing a tent from china to Germany for personal use in my back yard.

      the shipping is going to cost around 600 and the tent around 1000 – I would be paying VAT and import tax yes? is there an easy calculator online that could help me estimate the total expected cost?

      Thank you!

    29. Ken at 8:31 pm

      Hi Fredrick,

      Thanks for providing info. I am an Irish based business selling, importing good from China into Ireland, forwarding to Amazon FBA in UK with good being stored in Uk before being sold to Uk based private individuals. As the goods are stored in UK (Amazon warehouse) dies this mean I am an overseas seller as opposed to a distance seller and have to register for UK VAT with no threshold? Ie from first sale. Whereas if I was selling without from Ireland without UK storage I would be a distance seeker and follow Irish VAT rules until I reach Uk distance seller threshold of £70k? This is my understanding from online research. Is this correct and if so can I use VAT paid to Irish customs in goods from China against my UK VAT? Thanks again.

    30. Neil at 9:12 am

      Hi Fredrik, thank you for helping us :)

      Say we have a UK LLP that sells goods to a German client (B2B).
      The goods are manufactured in China and we ask our freight forwarder to deliver them to their warehouse in Ireland. We are also asking them to pay all import charges on our behalf, re-pack everything, and deliver to the client in Germany.
      Goods never actually enter the UK.
      How would it all work out with the VAT in the end?
      And what VAT shall we charge our German clients?
      Thanks

      1. Fredrik Gronkvist at 10:57 am

        Hi Neil,

        I am not a 100% sure, but I think that you will need to get VAT registered in Ireland, and your customer in Germany will pay the difference on the VAT in Germany.

    31. Teresa at 4:31 pm

      Hello Fredrik,
      Thanks for sharing the info. It’s very helpful.
      When I asking a quote from a supplier in China, she asked if I will make the customs declaration on my own or she will do it for me. I answered that I will ask my freight forwarder doing it.
      Then she asked if she needs to provide me the VAT invoices. If yes, the quote will be higher. However, you just mentioned that I shouldn’t pay VAT to China supplier directly. In this case, is she frauding me? What’s the VAT invoice for?
      Thanks

      1. Fredrik Gronkvist at 8:22 am

        Hi Teresa,

        The supplier is referring to Chinese VAT, which is a totally separate system. This article is about EU VAT.

        As an importer, you should order according to FOB terms. Hence, no China VAT is added.

    32. Dan at 11:10 pm

      Hi ,
      can I import goods for China , even if Im not VAT registered.
      I will customize them and sell it piece by piece on auction sites , but as individual not as company.
      The imported goods will cost about $10000
      Thanks.

      1. Fredrik Gronkvist at 10:45 am

        Hi Dan,

        I think you can, but you cannot deduct the VAT, which means it will be a lot more costly in the end

    33. habiba at 8:50 pm

      hi i ordered from china goods for about 291$ and i live in south africa so i paid about R3400 but when it came through to my country i had to pay R2800 on taxes and vat
      how is it calculated

      1. Fredrik Gronkvist at 10:46 am

        Hi Habiba,

        This article is about the EU.

        Most likely, the calculation method is similar for South Africa, but I don’t know the exact VAT amount

    34. Peter Man at 8:04 am

      Hi Fredrik,

      Great article.

      We’re a business based in HK with an opportunity to sell to individual customers in Europe.

      Can we establish a company in Europe for invoicing and VAT purposes and deliver the product directly to our individual customer?

      Thanks,

      Peter

      1. Fredrik Gronkvist at 10:53 am

        Hi Peter,

        Will you still ship from Hong Kong directly to the customer in the EU?

    35. Li at 5:05 pm

      Hi,
      If I import good from China, can I get an exemption on paying VAT if I resell the good to another EU business location in a different EU country.
      I am importing goods to Spain and am looking to sell to a business client in Belgium. My client is asking me to get an invoice on 0% vat reverse charge. Can I claim back the VAT that I paid at the time of import as otherwise all my margin goes to the state?
      Thanks
      Li

      1. Fredrik Gronkvist at 11:51 am

        Hi Li,

        Are the products shipped from China to Belgium or Spain to Belgium?

    36. Daniel Jones at 12:38 am

      Hi Fredrik

      Great article, thank you for the info it has cleared a lot up for me.

      I have a UK Ltd company selling products in the UK and Germany through Amazon, the stock being imported from China and stored in Amazon’s warehouse in both countries. This makes it so I have to register and submit VAT to Germany. I am not UK VAT registered and have not yet hit the threshold.

      I have a couple of questions:

      1. Do I calculate profit/loss to submit to Companies House and HMRC (CT) before or after deducting German VAT?
      2. Do I record import duties and shipping costs as a normal expense and the VAT on the goods and sales separately for my VAT returns?
      3. Is the profit from selling in Germany included in the profit threshold calculation in the UK for paying UK VAT?

      Once again, great article!

      Thanks for your help

      Daniel

      1. Fredrik Gronkvist at 11:56 am

        Hi Daniel,

        We just published an interview with Simply VAT that answers your questions :)

        https://www.chinaimportal.com/blog/vat-ecommerce-amazon-sellers-european-union/

    37. John at 5:17 pm

      Hi

      I work for a Dutch company”s sister company based in the UK.

      We have a UK VAT number for the LTD company and a Dutch VAT number for the BV company.

      We import goods to the UK from outside the EU in the name of BV, do we use the UK VAT number (although Ltd don’t own the goods) to clear UK customs?

      1. ChinaImportal at 9:49 am

        Hi John,

        Good question. I am not sure if you can even import goods using an offshore (non EU) entity, to the EU.

    38. Michelle Paterson at 3:57 pm

      Hi
      I have costed an ultrasound machine form china costing $14,000 this includes postage. I take it I have to add 20% VAT onto this? I noted some items were VAT free or am I just being hopeful.

      1. ChinaImportal at 9:51 am

        Hi Michelle,

        You will need to pay both VAT and import duties

        Be careful though. Machines must be CE compliant, and the customs may force you to show documentation that very few suppliers in China can provide.

    39. Ema at 9:07 pm

      Hello,
      Could you please confirm if I understood correctly; if I am importing goods from China and my company is based in Germany but the port of entry is Slovenia, Kopar, then I would pay the Slovenian VAT in Kopar and from this point on simply transport the goods to Germany without paying German VAT? Thank you! Ema

      1. ChinaImportal at 7:19 am

        Hi Ema,

        No that is not correct. You will pay German VAT if the goods only transit through Slovenia.

    40. chris at 3:58 pm

      looking to ship golf club heads from china to Scotland , and they are asking for a Vat number , I am not a company just an individual making a purchase for myself , don’t understand the VAT number requirement?

      1. ChinaImportal at 4:33 pm

        Hi Chris,

        Only companies have VAT numbers. As an individual it should not be required.

    41. Alex at 12:06 pm

      Hi, Liam,

      Could You help me to solve the question:

      Our company based in UK (Scotland) and have VAT #.
      We are importer and wholesaler goods from China.

      -Country of entry is Lithuania and, as I understand we must pay VAT in Lithuania.
      -Our B2B Customers from Germany, Netherlands, Spain. Based on EU VAT rules we must sell to the EU clients goods without VAT.
      So… is it possible to refund (deduct) VAT what we paid in the country of entry (Lithuania) later in UK, where the company based?
      If yes, how we can do that?

      Thanks in advance,
      Alex.

      1. ChinaImportal at 7:54 am

        Yes, you don’t pay the full VAT more than once. If you import to Country A, with a 20% VAT rate, and then “export” the products to Country B, with a 25% VAT rate, you only pay the difference of 5%.

    42. liam at 8:09 pm

      Hi,
      I’m living in Ireland and looking to set up an online site to sell products from China
      Buying 500 products with a total price of €350
      New to this and wondering when I would pay VAT, should I register for VAT?

      1. ChinaImportal at 3:37 am

        Hi Liam,

        You normally pay VAT on arrival. And yes, you should register for VAT.

    43. Nabil at 6:33 pm

      Hi,
      Is there any VAT on the machinery that imported from China and also is there any import duty, if yes, how much is that? Is the freight cost subject to any of the import duties and/or a VAT?
      Kind regards

      1. ChinaImportal at 11:44 am

        Hi Nabil,

        Yes, VAT applies to almost all products imported from China.

        The UK standard rate is currently 20%.

        Yes, it is, as the customs value includes shipping to the country of destination

    44. Angel at 1:51 pm

      If the importer has to declare the value of the goods to the custom authorities, then who and how observers and checks for any potential frauds not being made? For instance, if the importer doesn’t present the real value of the goods but understate/minimize it purposely, in order to pay a small VAT? And is it possible to get involved the supplier as well?

      1. ChinaImportal at 4:31 am

        Hi Angel,

        There are 2 ways:

        1. The customs have access to a lot of historic data. If the goods are valued “too low”, they may demand bank transaction records

        2. You may also get caught in a company audit, in which case the authorities will compare the declared value to the amount paid to the supplier and freight forwarder

    45. Alen Dane at 5:56 am

      I have got much clear idea on the VAT system from this piece of writing. I’m just beginning my journey. Thanks. Definitely taking your recommendations.

      1. ChinaImportal at 4:35 am

        Hi Alen,

        Glad to hear that!

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