VEXP80320 | Examples of various export scenarios and VAT treatments: Examples involving exports to associated companies outside the UK: UK business customer arranges for delivery to their overseas address

In this example of an indirect export

• A UK business company makes taxable supplies from its UK establishment

• The company also has a non-UK branch.

• A UK supplier sells goods to the UK office which are to be exported to the non-UK branch and sends the invoice to the UK office (its customer).

• The UK supplier delivers the goods to a freight forwarder employed by the customer (or the freight forwarder collects the goods from the UK supplier).

• The freight forwarder exports the goods to the non-UK branch on behalf of the customer.

The supply cannot be zero rated because

• the non-UK branch is part of the UK company

• the UK company has an establishment in the UK from which it makes taxable supplies

therefore, the supply is made to a taxable person with a business establishment in the UK, with a subsequent transfer of own goods to the non-EU branch

The conditions set out in regulation 129 or regulation 133B of the VAT Regulations 1995

This applies equally

• where the transaction is invoiced to the UK customer or

• where the invoice is sent to their non-UK branch.

However, zero-rating can apply where:

• The customer’s entities are legally separate even within the same corporate group.

• The customer makes no UK supplies, or they are not taxable supplies.