Example 2: a US company exports to the EU 

The same computer manufacturer (in this example the importer) sells the computer to one of its customers. Again, the sale is worth $10,000 and, if the VAT rate is 20%, the computer manufacturer charges the customer $12,000 ($10,000 for the sale and $2,000 VAT).

 However, in this second example, the computer manufacturer has bought $8,000 worth of computer equipment from a company in the US. This company (the exporter) used an express carrier (e.g. DHL, FedEx, or UPS) to ship the goods to the EU. When the express carrier cleared the goods with EU customs, it paid taxes and duties ($1,600 VAT) to the EU customs. Afterwards the express carrier sent an invoice for the taxes (VAT) and duties to the exporter.  

Because the exporter paid the VAT (via the express carrier) on this sale, the importer did not have to pay VAT on this purchase. Therefore the importer cannot deduct any VAT from the $2,000 VAT he received from his customer. Thus, he has to remit the full amount of VAT he received to the tax authority.

Hence, the tax authority receives $1,600 VAT from the US exporter (via the express carrier) + $2.000 VAT from the computer manufacturer = $3,600 VAT, when in fact it only should receive $2,000.

Therefore, the tax authority has received $1,600 too much. This is exactly the amount that ExportVAT can reclaim for the exporter!

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• VAT Introduction
• What is VAT ?
• US Export and EU Import
• Example: Sale within EU
• Example: US Export to EU
• History of VAT in the EU