Excise Duty and Selling Within the EU

Exporting to another EU Member State is very easy today. All the current 27 Member States are generally treated as one economic region where taxes including excise duty are not payable on goods as they move between each country.

Your business may, however, have to pay specific charges in some countries. Check with the Member State before your consignments are despatched to ensure you know the full cost of delivering the goods to your customers

Excise goods are highly controlled as they move between Member States of the EU. It is, therefore, vitally important that your business keep accurate records of the movement of excise goods. Your consignments must also travel with the right documentation.

Classifying your Goods

To ensure the goods you are exporting to another EU country are properly accounted for regarding excise duty your business must accurately classify the items. This is done using the Integrated Tariff of the United Kingdom, usually referred to as the Tariff. This is a complete list of all goods that are traded within and outside of the EU. To ensure you properly account for excise duty on your exports to another EU country, you must use the Tariff to generate a Commodity Code that precisely describes the goods you are exporting.

Distance Selling and Excise Duty

With the rise of the Internet as a commercial selling channel, your business’s customers can now buy excise goods online. If an overseas customer orders excise goods from your online business, you can sell them the excise goods as long as that customer is based in one of the EU Member States. The customer must also account for the excise duty that may be payable on the goods in their country when they arrive. The HM Revenue & Customs (HMRC) requires that all excise goods are properly accounted for when they move between EU Member States.

Excise Duty and REDS

The REDS (Registered Excise Dealers and Shippers) system enables your business to appoint an agent to handle the exportation of excise goods. Generally, REDS agents can also organise excise goods warehousing. Excise duty can also be suspended in some circumstances. Your REDS agent can help you set-up warehousing arrangements that can include duty suspension where this is possible.

Excise Duty and Drawback

If your business has bought excise goods into the UK, but these have been warehoused and will not be consumed within the UK, your business can usually claim back the excise duty that you will have paid. The system is called duty drawback. There is detailed information customs notice 207 available on the HMRC website. Remember that your goods must have been imported from another EU Member State and be held in an approved customs warehouse for the duty on those goods to be fully suspended. Any excise goods you import from outside the EU, must have its duty paid in full. Customs notice 197 gives details of how duty suspension works.

Excise Goods Documentation

When your business moves excise goods out of the UK, each consignment must be accompanied by a full set of documentation. Generally, the AAD (Accompanying Administrative Document) is used when goods move between EU Member States that have already had their duty suspended. REDS users will use this document as should any occasional exporters of excise goods. In addition to the AAD, the SAAD (Simplified Accompanying Administrative Document) may also be need if the goods you are exporting have been released into free circulation and could be consumed. Your consignment will also normally require the UK Internal Accompanying Document (W8). More help and information is available from the HMRC National Advice Service Enquiry telephone line on:0845 010 9000.

Financial Guarantees

All exports of excise goods must be covered by a full financial guarantee to the amount of duty that the goods would normally attract. Your business, the transport provider or warehouse keeper where the goods are currently stored can provide this financial guarantee. The financial security that you must have in place will be linked to the AAD and W8 documents that your consignments must travel with. It is vitally important that these financial guarantees are in place as without them, your goods will not be allowed to move through customs as they leave the UK.