VAT and the Channel Islands (Jersey, Guernsey etc)


The status of these islands for VAT purposes often causes confusion for UK businesses selling goods or services there: are they part of the UK, or aren’t they?

Jersey flagWell, the Channel Islands (Jersey, Guernsey, Alderney, Sark and Herm) are NOT part of the UK or the European Union for VAT purposes.

Does this mean you need to charge VAT on sales to Jersey? The answer depends on whether you are selling goods or services.

VAT on goods

Goods exported to the Islands can be zero-rated for UK VAT purposes, as long as documentary evidence of the export is kept. Any extra charges made for freight, shipping, postage or delivery are also zero-rated.

Even where VAT is not being charged, the net value of the sale must still be reported on the UK VAT return, in box 6. It should not be included on the EC Sales List, nor on an Intrastat return if the business is required to make one.

If the UK business accounts for VAT on the Flat Rate Scheme, it must include the value of the export in the turnover on which the Flat Rate VAT is paid. This may mean that the business is better off not being on the Flat Rate Scheme.

There is no requirement to account for VAT on imports into the UK from the Islands in the same way as from other EU states.


As the Islands do not have their own VAT, a UK business should not be charged Channel Islands VAT on any goods, but may be charged the standard rate of UK VAT on importing goods into the UK. This can be reclaimed on the regular UK VAT return, subject to the normal rules about reclaiming input VAT.

Since May 2008, Jersey has operated a Goods and Services Tax (GST) on some supplies, initially at 3% and then since June 2011 at 5%. This works in a different way to the Value Added Tax systems operated by the rest of the EU. It should only be charged to customers who are based in Jersey.

VAT on services

UK VAT may need to be charged on services performed in the Islands or to clients based in the Islands, depending on the nature of the service supplied. This is a complex area, but broadly, assuming the supplier belongs in the UK and the customer belongs in Jersey, UK VAT will need to be charged on most services unless one of the following exceptions applies:

  • UK VAT does not need to be charged on most services relating to land or property situated in Jersey. This includes estate agency, conveyancing, architects, surveying, construction, property maintenance, hotel accommodation, defined exhibition stands, and property management services.
  • UK VAT does not need to be charged on most services related to a live event or physical activity carried out in Jersey. This includes cultural, artistic, sporting, scientific, educational, training, entertainment, exhibition and valuation services.
  • UK VAT does not need to be charged on passenger transport carried out in Jersey.
  • UK VAT does not need to be charged on most ‘intellectual’ or ‘intangible’ services supplied to a customer who belongs in Jersey. This includes copyright, royalties, licences, advertising, consultants, engineers, lawyers, accountants, banking and insurance. If the service relates to land or property situated in the UK, VAT still needs to be charged.

There are special rules for hired goods (section 13 of VAT Notice 741) and telecommunications (section 14 of VAT Notice 741).

With all these services, it is important to look at the precise nature of the underlying service being provided. A business cannot turn one type of service into another simply by changing the description on the invoice.

Please note that are not taking on any new overseas clients, and we do not give free advice by email or telephone.



53 Comments (oldest first)

  1. 1.  Ruben says:

    We are delivering goods from Holland to a customer (buyer) on the Channel Islands. Goods are being delivered to the UK (Fareham).
    The customer is taking care for transport from the UK to the Channel Islands. Do you know how to handle this VAT issue? It is causing us headaches ;-). Thanks in advance.

    26 September 2008
  2. 2.  admin says:

    If you are delivering your goods from Holland to the UK, then you proceed in the same way as if you were delivering to a UK customer. In summary, if your Channel Islands customer can give you their UK VAT registration number, and you keep documentary proof of the movement of goods, then you do not need to charge Dutch VAT. If either of those conditions is not met, then may have to charge Dutch VAT.

    What your customer does with the goods once they are on UK soil is no longer your concern.

    27 September 2008
  3. 3.  Dave says:

    When selling items such as clothing, accessories etc to the Channel Islands, alot of the customers ask us to deduct the VAT for them. Can we do this?

    23 October 2008
  4. 4.  admin says:

    Goods exported to Jersey would not normally have VAT charged, so I am not sure what you mean by deducting VAT for your customers.

    24 October 2008
  5. 5.  Bashar says:

    We are a UK VAT registered company, provide freight forwarding services, we have deliviries for a UK VAT registered customer to the Channel Islands, do I have to charge them for VAT on forwarding & delivery charges or not?

    20 March 2009
  6. 6.  Pat says:

    We are shopfitters carrying out work for a store in Jersey, for which we will not be charging our client in Jersey VAT. However, a sub-contractor who is based in the UK and employed by us on this job is charging us VAT on their invoice to us - is this correct or should their invoice to us for work carried out in Jersey, not have a VAT element. (We are VAT registered)

    23 April 2009
  7. 7.  admin says:

    If your subcontractor is charging you for a service related to land or property in Jersey, their service is outside the scope of UK VAT. They should not be adding UK VAT.

    23 April 2009
  8. 8.  Caroline says:

    We sell consumer goods in the UK. The price includes VAT. We are sometimes asked by Channel Island (potential) customers if we can deduct the VAT if they buy from us. These are consumers, not businesses and therefore don’t have their own VAT registration number. Should we deduct the VAT or is it better for them to reclaim VAT after purchasing?

    26 May 2009
  9. 9.  admin says:

    You can only charge VAT at 0% if the goods are being removed from the UK.

    Where you are arranging the transport out the UK, this is usually straightforward, however you must keep some proof of export. It does not matter whether or not the customer is registered for VAT, if they are based in the Channel Islands.

    If the customer is arranging the export, a sale of goods to an ‘overseas person’ (a person or company who is not resident or registered for VAT in the UK, has no business establishment in the UK from which taxable supplies are made, or is an overseas authority) in the Channel Islands can be zero-rated if the customer provides you with proof that the goods have been removed from the UK. The goods must not be used in the UK between sale and export.

    26 May 2009
  10. 10.  Ana says:

    I work in a Portuguese company, and we need to charge to a Jersey
    company the services of a construction worker, that belongs to my company
    but is now working in Jersey. Do i charge VAT or not?
    In Portugal we are required to mention in the invoice the VAT registration number, but the company tells me they dont have one, is that right?

    3 June 2009
  11. 11.  admin says:

    We cannot comment on the Portuguese system of VAT, but if it is similar to the UK (most EU countries have similar rules), it would be as follows:

    Work carried out on land in Jersey is outside the scope of UK VAT, so it does not need to be charged.

    Since Jersey does not have VAT, a Jersey company will not have a VAT registration number to include on your invoice. This is in contrast to the rules which apply to the other EU Member States.

    5 June 2009
  12. 12.  lynn graham says:

    I am a resident in the channel islands, I regularly shop online without being charged vat but have recently come across a few companies who refuse to remove the vat for me. Legally is it my responsibility to claim the VAT back or theirs not to charge it?

    8 June 2009
  13. 13.  admin says:

    Legally a website can offer its goods for sale at whatever VAT-inclusive price it likes. However, it is unlikely to be in their best business interests to do so when they are entitled to sell without charging VAT. Perhaps they just need to be made aware that they do not need to charge VAT when exporting to the Channel Islands.

    8 June 2009
  14. 14.  Phil says:

    I know that VAT need not be paid when selling a physical product of under £18 being dispatched from Jersey to the UK, as Play.com do. But how about selling downloads (such as mp3s or ebooks) from Jersey to the UK. Would this require VAT to paid?

    30 July 2009
  15. 15.  Mark Adnitt says:

    Hi

    We are a Guernsey Company that make Radio commercials
    we us ISDN and The Internet not only to deliver our UK customers the finished radio commecials , but also to recive and direct voice over sessions from the Uk that we then mix into the advert ….. are the voice over artists working from the UK
    but directed and recorded here in Guernsey via the net or ISDN Phone lines supposed to charge us VAT ..or is there work classed as export??

    Regards

    Mark

    6 August 2009
  16. 16.  Bill says:

    If I buy something mail order from Jersey, where no VAT is charged, will I have to pay VAT when it is delivered to me? I am not VAT registered.

    21 August 2009
  17. 17.  Wendy says:

    Our company is currently exporting products to Jersey. On the Inland Revenue web site Jersey is classed outside the EC for VAT purposes and therefore eligible for VAT on sales, although in your report you say with relevant documentation as proof of sales and delivery we should be able to exclude VAT. If I have said documents and therefore do not charge VAT do I have to fill in box 8 on VAT form and also complete an Intrastat form?

    17 September 2009
  18. 18.  admin says:

    Exports from the UK to Jersey should not be included in box 8 on the VAT return, and are excluded from Intrastat.

    17 September 2009
  19. 19.  Phil says:

    We run a business in Jersey and we ordered goods from the USA. These products will arrive in a UK port before shipped to Jersey. Do we pay VAT & import duties in UK ?

    22 September 2009
  20. 20.  Georger says:

    We are a vat reg’d business based in the UK and have been commissoned to undertake live performances (presentations & workshops)in Guernsey. Do we need to charge vat on our services? If so at what rate ?

    16 October 2009
  21. 21.  admin says:

    Most live performances performed in Jersey or Guernsey are outside the scope of UK VAT, so it does not need to be charged. Refer to section 7 of VAT Notice 741 for more detail on which live performances qualify for this exemption.

    16 October 2009
  22. 22.  Rob says:

    Is it correct that a Jersey ltd company can reclaim VAT it paid to UK companies only when it also charges VAT to its UK customers (for services)?
    In other words, if you want to reclaim UK vat, you must register for UK Vat and then start charging your UK customers vat also.

    29 October 2009
  23. 23.  admin says:

    Very broadly that is correct, but you may be able to reclaim some UK VAT under the EC 13th VAT Directive which is described in section 6 et seq of VAT Notice 723.

    29 October 2009
  24. 24.  MARTIN says:

    We have recently been awarded a construction job in jersey for next year and the company we will be working for and invoicing will be uk based but the work will be in jersey. What will we be charging vat ? 0 % ? 15 % ?

    30 October 2009
  25. 25.  admin says:

    If the land or property is in Jersey, your service is outside the scope of UK VAT. It is not charged.

    30 October 2009
  26. 26.  Rob Matthews says:

    My wife and I have moved to Guernsey for a five year period. During this time we have local status and are liable for GY tax.
    We have a property in England that we rent out through an agent. On all of our statements we have been charged vat on all goods, fees and works carried out.
    Could you please advise on what we actually have to pay vat on?

    2 November 2009
  27. 27.  admin says:

    As the property is in England, all services relating to the property are subject to UK VAT.

    2 November 2009
  28. 28.  Les Gurubatham says:

    We provide a service by distribution information leaflets for our client based in Jersey. These leaflets/pamplets are basically promoting tourism in Tasmania, Australia.

    Can this be treated as advertising and therefore non VATable?

    From time to time, the client also asks us to send out some cuddle toys (i.e. resembling Australian animals) to its UK based agents or at Travel shows, - can this be treated as Non VATable too?

    Thank you
    Les Gurubatham

    9 November 2009
  29. 29.  Rob S says:

    We want to sell goods to a customer in Guernsey. I see from the above this sale will be free of vat but is this irrespective of the vat status of the buyer-ie does he need to be registered for it to be free of vat?

    3 December 2009
  30. 30.  admin says:

    The VAT status of the buyer is irrelevant.

    3 December 2009
  31. 31.  craig says:

    We are a UK company which is using a UK mailing house to send mail in the UK on behalf of a company in Guernsey.

    Do we charge VAT to the Guernsey company. Can we reclaim the VAT that we will be charged?

    I realise postage does not attract VAT. I’m referring to the cost of the letters, leaflets, envelopes etc.

    31 January 2010
  32. 32.  admin says:

    More information is needed here. Are you providing a printing service, a postage service, or a marketing service? Are you an agent of the Guernsey company? Is the mailing house your agent?

    I think you need paid professional advice.

    31 January 2010
  33. 33.  ajay in jersey says:

    hi

    we are a jersey company and selling a large amount of used machinery to a uk vat registered business. we have issued an invoice to the customer which includes vat (and our freight company has issued us a vat payment notification - i.e. we paid shipping company the vat) in order to compy with customs. how does the uk based business claim back the vat? and my paperwork is obviosuly not a vat invoice (except i have included paperwork to show vat paid to shipper).

    thanks

    3 February 2010
  34. 34.  admin says:

    The freight company should issue a VAT certificate to your customer, which will enable them to recover the VAT.

    3 February 2010
  35. 35.  Dave says:

    We have sent some engineers to Jersey from the UK to do some work, they have come back with hotel bills including VAT, can this be recovered from HMRC?

    Dave

    4 February 2010
  36. 36.  admin says:

    There is no VAT in Jersey, but there is GST. GST cannot be recovered from HMRC.

    7 February 2010
  37. 37.  michelle says:

    We are a Uk based wine company are sending an order to a member of the public in jersey do I charge vat?

    18 February 2010
  38. 38.  admin says:

    As stated above, goods exported to the Islands can be zero-rated for UK VAT purposes, as long as documentary evidence of the export is kept.

    19 February 2010
  39. 39.  Dave says:

    Hi,
    This is a very useful page. If we remove the VAT that we would usually charge because a customer is in the Channel Islands, how would this be entered in accounts? VAT has been paid to our importer for the goods which we can reclaim from HMRC. Normally we would enter this sale in our accounts with VAT added, do we just remove the VAT and record it as otherwise a normal transaction, or does it need to be entered somewhere in the VAT 100 report?

    26 February 2010
  40. 40.  admin says:

    You record it as a normal transaction only with no VAT, so that it is included in the box 6 total. It should not appear in box 8.

    26 February 2010
  41. 41.  anna says:

    Do the Channel Islands allow electronic invoicing? If so, what are the requirements? (E.g. in the UK, integrity and authenticity of the e-invoice must be guaranteed, using electronic signatures, EDI or “other means”.)

    26 February 2010
  42. 42.  James says:

    If a client from Jersey books for a sporting event in the UK do they have to pay the vat rate?

    27 February 2010
  43. 43.  admin says:

    During 2010, these services are treated as being supplied where they are physically carried out. If this is in the UK, UK VAT is likely to be charged. If the service is being received for business purposes, it may be possible to reclaim the VAT under the EC 13th VAT Directive which is described in section 6 et seq of VAT Notice 723.

    27 February 2010
  44. 44.  Nick says:

    I am a freelance purchasing consultant, and have just started to do business with a Jersey registered company, who are a Contractor on an African pipeline construction project. I have my own VAT registered business. None of my work will take place in Jersey. As a consultant, do my services get categorised as ‘intellectual’ and therefore UK VAT would not be charged on my invoices? The Jersey registered company propose to give me the title ‘Purchasing & Expediting Officer’. Would this still be categorised as ‘Intellectual’, or would it assist if Consultant was on my title?

    3 March 2010
  45. 45.  admin says:

    You need to look at the real nature of the service that you are supplying. The title that you choose to use makes little difference, and rightly so.

    3 March 2010
  46. 46.  chris says:

    We are a trade association (for businesses not individuals) with a new member in Jersey. We provide admin for the association in the UK and quarterly meetings for members are held in the UK. Obviously we supply services not goods, but should we be charging VAT on the annual invoice to the new Jersey member?

    5 March 2010
  47. 47.  admin says:

    As a starting point, you need to look at the exact nature of what is being supplied, and whether you are making a single or a multiple supply. I would recommend you read VAT Notice 701/5, which explains how VAT applies to clubs and associations.

    21 March 2010
  48. 48.  Nick says:

    Concerning 44 and your response 45, I am providing professional advice (as a procurement consultant)and also expediting services, monitoring progress at a manufacturer in Germany. I will be operating from my own office in UK, as well as client’s office in Paris and regular visits to German manufacturer.
    My client have stated (since 44) that VAT does not have to be included on invoice.

    25 March 2010
  49. 49.  Ann says:

    My company is exporting used fork lift trucks to Jersey on behalf of another company. We are invoicing head office in the uk for the trucks. Jeresey is a delivery address.

    1) If we have proof of delivery to Jersey do we have to add VAT to the invoice?
    2) We have been told that we need to pay a 3% GST by Jersey customs for delivering the trucks to Jersey. Is this correct?

    29 March 2010
  50. 50.  Annie says:

    I am a Jersey resident and have applied to go on the Qualified Lawyer Transfer Test Course which will take place in London over two weekends. I did not tick the box for VAT on the appliction form as I said that since I lived in Jersey, I would not have to pay the VAT on the course.

    However, I have since received an e-mail from the course provider saying that I will need to pay VAT. That I may live overseas but as I am studying in the UK by attending the two weekend courses, VAT is payable. I

    Do you know if I should be paying this VAT or not?

    Thank you

    1 April 2010
  51. 51.  admin says:

    During 2010, training services are treated as being supplied where they are physically carried out. As this is in the UK, UK VAT is payable.

    1 April 2010
  52. 52.  Annie says:

    Hello

    I have received the response beneath from SKYPE when I queried why they were charging me £23 every time I wanted to top up my call credit on my phone by £20. I said that because that I lived in Jersey in the Channel Islands, that I was not subject to VAT and asked them to stop invoicing me for this £3.

    “Thank you for contacting Skype Support.We understand your concern regarding VAT. Currently Skype does not differentiate between payments received from various low tax regimes within the EU, and will charge 15% VAT for these transactions. Our current arrangements allow us to charge the Luxembourg rate (15%) for all transactions from within the EU. We are aware that the VAT rate is lower in certain areas (Canary Islands, Madeira, UK Channel Islands & Isle of Man). We have requested clarification from Luxembourg authorities, where we are based, as to how to treat low tax locations within the EU. Until we receive this clarification, we must charge you 15% VAT. You are able to request a VAT receipt from us, and may be able to recover the VAT. We understand that this situation influences the rates for your calls but we hope that our rates are still competitive. Should you need more assistance, feel free to contact us again; we will be glad to help.”

    Could you please let me know what the correct position is?

    Thank you

    1 April 2010
  53. 53.  admin says:

    While we would not claim to be experts on Luxembourg VAT, the general position is that Jersey is not in the EU VAT area, and a telephone service effectively used and enjoyed outside the EU should not have VAT added by a country within the EU.

    1 April 2010