Importing - import tax, VAT and excise

If you are considering importing goods, there are three key import taxes you need to be aware of: import VAT, import duty and excise duty. Import VAT is charged at the same rate as for goods bought from UK suppliers, but for imports from suppliers outside the European Union (EU), import duty is usually charged as well. If you are buying excise goods such as tobacco products, you also need to take into account excise duty.

Some importers can benefit from significant opportunities to reduce or defer import VAT, import duty and excise duty.

Import VAT

Import VAT is charged at the normal rate of VAT for the same goods from the UK. But the way import VAT is treated depends on whether you are importing from another EU country (sometimes referred to as 'acquisitions' rather than imports) or from outside the EU.

For purchases from outside the EU, you pay import VAT as part of the import process. You may also have to pay additional import duty, depending on the type of goods and where they come from. You pay VAT on import duty, too.

If you are importing from another EU country, you should give the supplier your VAT number. The supplier can then sell you the goods as if they are zero-rated, without charging any import VAT. You must get a VAT invoice for your VAT records.

However, import VAT is still due at the normal VAT rate. You account for this unpaid ‘acquisition tax’ on your VAT return. You can reclaim VAT due on imports in the same way as VAT on purchases made in the UK.

Excise duty

Excise duty is charged on imports of most fuel, alcohol or tobacco products. Excise duty is payable whether the goods are imported from another EU country or from a country outside the EU. Import VAT is also charged on the value of the goods plus excise duty.

Import VAT and duty planning

You may be able to reduce or defer import VAT, import duty and excise duty.

Storing goods in a customs warehouse allows you to defer payment until you remove the goods from the warehouse. This is often done by businesses importing goods that are subject to substantial excise duty.

A number of other duty and VAT reliefs may apply, particularly if you are importing goods from outside the EU and plan to re-export them outside the EU. Depending on the relief, you may not need to pay import VAT, import duty or excise duty. You may want to take advice on how best to deal with import VAT and customs duties for your particular circumstances.

You might like to read our related content on:

• Excise duties