TRUMPET CAll

Since Brexit, the UK is classified as a third country for the purpose of Customs and haulage and subject to the place of supply rule for the movement of export goods, business to business. Where the place of the departure of the goods is an EU Member State, with a standard rate of VAT applying, i.e: Republic of Ireland (ROI) @23% with delivery to Non-EU Member State destinations, there is often confusion as to whether the VAT rate of 23% or 0% should be applied.

RE: VAT on Services – Export Haulage ex-Ireland to the UK

Liam Davis, W.P.D. Freight Management (Dublin) highlights an ongoing issue

The issue becomes more complicated when an intermediary e.g., freight forwarder, directly or indirectly provides the export haulage, to countries such as the UK, since January 2021 (Brexit). Some providers are charging 23% VAT on the export haulage and others are not.

I raised the question via the Revenue’s ROS online / My enquiries as follows, based on Revenue Customs guidance and VAT Consolidation Act 2010 (VATCA 2010), Ref. Section 46(1) (1), under Schedule 2, paragraph 3(2): “Please clarify what VAT rate should be applied on road freight export haulage, if invoicing an Irish registered company from collect ROI, to a UK based destination?”

All responses quoted the act on application of 0% VAT, in conjunction with “The Place of Supply” rule and advised VAT should be based on 23%. Based on the reply I then added scenario - “Export haulage”, when described as prepaid freight, invoiced to a shipper or intermediary, for exports from e.g., ROI to the USA. The place of supply rule could be deemed to apply to export freight and should therefore be subject to VAT of 23%. The matter was escalated to another VAT section and the following responses were received.

Clarifications from ROS the Minister for Finance (full copies of content available)

“The Zero Rate of VAT will apply on the haulage of goods where the goods are being delivered outside the European Union. This is in line with Schedule 2, Part 1, Paragraph 3(2) of the VAT Consolidated Act in which the carriage of goods in the State by or on behalf of a person in performing a contract to transfer the goods to a place outside the Community. ROS Business Division 04/08/2022 16:07 Status: Complete”

The office of the Minister for Finance, Paschal Donohoe T.D. advised: “The activity of transport or haulage services of goods supplied by Irish established businesses can be chargeable to VAT at the standard or zero rate. The transport or haulage service of goods from a place in the State to a destination outside the EU i.e., export to a third country, as part of a through contract to supply those goods is zero rated per Schedule 2, paragraph 3(2) of the VAT Consolidation Act 2010. The transporter or haulage provider must satisfy Revenue that the zero rate applies and that they hold documentary evidence that the goods exported have left the EU. If the transport or haulage service of goods is not part of a through contract to a third country, the standard rate of VAT will apply. “

Based on the above revenue responses, it is my belief that, that subject to incoterms, the question of 0% VAT may be resolved by securing or offering rates for ROI export haulage to UK destinations, that are inclusive of local collection ROI, ferry cost and UK local delivery as a through contract and invoiced to booking party/freight payor as a lump sum.

To conclude, one of the main issues is that Revenue only offer guidelines, however they do not give advice on the interpretation or one to one training or responses via email or by phone. I tried to get a response from EU UCC Committee, on changes since EU/UK FTA negotiations. Revenue will only provide a ‘Traders Guide’ to guidelines, leaving the reader to interpret how to apply them. I was surprised to note examples that accompanied the VAT act or Revenue Guidelines covered Air, Sea and Port export examples, but omitted Ro-Ro Freight.