International VAT Explained: Imports, Exports & EU Rules Simplified

Sep 21, 2025

International VAT Guide: Navigating Imports, Exports, and EU Rules After Brexit

Understanding International VAT After Brexit

International VAT has become one of the most confusing areas of tax compliance since Brexit. Businesses trading across borders — whether importing from outside the UK, exporting goods, or selling services — face a maze of rules that differ depending on the country, product, or service type.

In this article, we simplify HMRC’s guidance on imports, exports, the Northern Ireland Protocol, and EU VAT rules so business owners can understand their obligations without wading through technical jargon.

VAT on Imports: What You Need to Know

Postponed VAT Accounting (PVA)

Since Brexit, businesses importing goods into the UK must account for VAT at the border.
With PVA, you don’t pay VAT upfront at customs. Instead, you record and reclaim it through your VAT return.
This helps improve cashflow, but you must keep accurate records.

Duties and Import VAT

Import VAT applies at the same rate as if the goods were supplied in the UK (standard 20%, reduced 5%, or zero-rated).
Customs duties may also apply, separate from VAT.

👉 HMRC Source: Accounting for import VAT.

VAT on Exports: Goods Leaving the UK

Exports to outside the UK (including EU countries): Normally zero-rated for VAT purposes, provided you keep evidence that the goods left the UK.
This means you charge your customer 0% VAT, but you can still reclaim input VAT on related costs.

Evidence is Essential

HMRC requires proof (e.g., bills of lading, airway bills, commercial invoices).
Without evidence, you risk HMRC treating the sale as standard-rated.

👉 HMRC Source: VAT on goods exported from the UK.

The Northern Ireland Protocol

Northern Ireland has a unique position post-Brexit:

For goods, Northern Ireland remains aligned with the EU VAT system.
For services, Northern Ireland follows UK VAT rules.

Key Implication

If your business is in Northern Ireland and trades with the EU, you may still need an EU VAT number and to follow EU reporting requirements.

👉 HMRC Source: Trading and moving goods in and out of Northern Ireland.

VAT on Services Across Borders

The rules for services differ from goods:

B2B services (business-to-business): Usually taxed where the customer is located.
B2C services (business-to-consumer): Usually taxed where the supplier is located, with some exceptions (e.g., digital services, land-related services).

One Stop Shop (OSS)

If you sell digital services to EU consumers, you may need to use the EU’s One Stop Shop (OSS) or Non-Union OSS scheme to simplify VAT reporting across multiple EU countries.

👉 HMRC Source: VAT rules for supplies of digital services to consumers.

Why International VAT Matters

Cashflow Risks: Paying import VAT incorrectly can lock up cash unnecessarily.
Penalties: Misclassifying exports or failing to hold evidence can trigger VAT liabilities and penalties.
Reputation: Non-compliance with EU or Northern Ireland VAT rules can damage relationships with overseas partners.