Guide
International Haulage VAT
VAT on international haulage is one of the areas where reasonable assumptions produce wrong answers. Crossing a border does not by itself make a supply zero rated, and a UK customer does not by itself make it standard rated.
Two separate questions decide the treatment. Where is the supply made, and if it is made in the UK, does a relief apply to it.
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Written by the HGV Accountants editorial team
- Who this is for
- Haulage operators running international work, and subcontractors carrying legs of international movements.
- The problem
- International freight VAT is decided by where the customer belongs and what the transport relates to, and neither of those is the same question as where the truck went.
Question One: Place of Supply
For services supplied to a business customer, the general rule puts the place of supply where the customer belongs. A UK haulier carrying goods for a business customer established in another country is generally making a supply outside the scope of UK VAT under that rule, with the customer accounting for any VAT due in their own country.
Supplies to non-business customers follow different rules, and freight transport has its own provisions. This is the point at which the general rule stops being a safe shortcut, and the detail in Notice 741A (opens in a new tab) and Notice 744B (opens in a new tab) has to be read against the actual movement.
Question Two: Zero Rating
Where a supply of freight transport is made in the UK, zero rating can apply to transport of goods to or from a place outside the UK, and to certain associated services. The relief is specific and it is evidenced.
- The treatment follows the movement the transport relates to, not the nationality of the operator or the route the truck happened to take.
- A domestic leg of an international movement can qualify in some circumstances and not in others, which is why subcontracted legs need looking at separately rather than assumed to follow the main contract.
- The relief has to be supported by commercial documentation showing the movement. Without it, the default is standard rating.
What to Keep
Records that support an international VAT position
- Customer VAT number and evidence of business status, recorded at the start of the relationship.
- The customer's country of establishment, which is not always where the depot is.
- Commercial documentation for each movement showing origin and destination.
- Copies of transport documents for the leg you carried.
- For subcontracted work, the terms of the engagement and what the main contractor is treating the supply as.
- Foreign VAT charged to you, kept separate from UK input tax. See fuel card bookkeeping.
Common Questions
Do I charge VAT on a delivery to Ireland for an Irish company?
For a supply of transport to a business customer established outside the UK, the general place of supply rule usually puts the supply outside the scope of UK VAT, with the customer accounting for it where they belong. That is the starting point rather than the whole answer, because freight transport has specific provisions and the customer's status has to be established and evidenced.
I subcontract a UK leg of an international movement. What do I charge?
Look at your own supply, to your own customer, rather than at the overall movement. Your customer is usually the main contractor, and the treatment depends on where they belong and what your supply is. Do not assume it inherits the treatment of the international contract.
Can I reclaim VAT paid on fuel or tolls abroad?
Not on your UK VAT return. VAT charged in another country is not UK input tax. There are separate refund procedures in some countries, with their own deadlines and evidence requirements, and whether a claim is worth making depends on the amounts involved.
Does the Flat Rate Scheme work for international haulage?
The scheme applies a single percentage to your VAT inclusive turnover, with the transport and storage sector rate at 10 per cent. It interacts awkwardly with supplies outside the scope of UK VAT and with a business reclaiming substantial input tax on diesel, so it needs modelling on your own figures rather than being adopted for simplicity.
Related Guides
- Fuel Cards and VATWhy the bank payment is not the entry, and how to make the VAT on diesel actually recoverable.
- Self-BillingWhen the customer raises your invoice, the risk moves to you. What to check and what to keep.
- Cost Per MileWhat a mile costs, what empty running does to it, and the rate you need to stand still.
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