VAT, the UK and the Isle of Man


The status of this island for VAT purposes often causes confusion for UK businesses selling goods or services there: is it part of the UK, or not?

Well, the Isle of Man is not part of the UK, but following the 1979 Customs and Excise Agreement, it is treated as part of the UK for VAT purposes.

This means that goods sent from the UK to the Isle of Man are not treated as exports, and so VAT must be charged at the usual UK VAT rate. Similarly, supplying services to a customer belonging on the Isle of Man is the same as supplying the service to a customer in the UK.

Goods imported into the UK from the Isle of Man are not treated as imports in the same way as imports from other EU states. VAT charged by an Isle of Man business to a UK VAT-registered business can be reclaimed on the UK VAT return, subject to the normal rules about reclaiming input VAT.

VAT law in the Isle of Man generally mirrors VAT law in the UK, and is administered by the Isle of Man Customs and Excise.