New queries, issue 4552

VAT on EC trading

VAT obligations exist for a supplier of ship parts to Europe.

My UK VAT-registered client supplies parts to ship owners sourced from EC suppliers. The parts would be eligible for zero-rating (VAT Notice 744C) under VATA 1994 Sch 8 Group 8 item 2A if supplied in the UK being ordinarily installed in the propulsion navigation or communication systems or general structure of a qualifying ship. Item 2A corresponds with the recast Sixth Directive Art 148(a) with the right of recovery of input tax under Art 169.

Typically the goods will pass from the original supplier to the end customer either directly or via a forwarder acting for my client or the end customer. As examples the following situations arise.

First a supplier in Sweden sends goods direct to a ship in the Netherlands....