What are EC Goods?
Definition of EC Goods
EC Goods are tangible physical goods that are either bought from suppliers or sold to customers outside the UK, but in the wider EU.
EC stands for European Commission.
EC Goods are important for businesses that are registered for UK VAT.
If you sell EC Goods to businesses that are registered for VAT in their own countries, you must ask your customer for their VAT number and display that on any invoices you issue to them. Then, so long as the goods actually leave the UK within 3 months of the sale being agreed, you can charge 0% VAT on the sale.
If you sell EC Goods to businesses that are not registered for VAT or to end consumers, then you must charge UK VAT on the sales as if the customers were in the UK. If you sell enough goods in this way to break the 'distance sales limit' in any EU countries, you must register for VAT in those countries, file local VAT returns there and charge local VAT, rather than UK VAT, on those sales.
If you buy goods from businesses in the EU, you may have to give them your VAT number so that they can zero-rate the sale to you. You also have to account for acquisition tax on these purchases on your VAT return - which will not increase the actual amount you pay in VAT to HMRC unless you are using the VAT flat rate scheme.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.