Tax rate FAQ's
Frequently asked questions about tax rates
In this article we will document all of the most frequently asked questions relating to tax rates.
Why is the default tax rate for "EU Tax Jurisdiction Sales - Dispatched UK" Zero Rated Income? If i sell to an EU customer dispatched from the UK then currently VAT at the UK rate applies?
"EU Tax Jurisdiction Sales - Dispatched UK" grouped sales are sales that are delivered to EU customers in countries where you DO hold a VAT registration AND that are dispatched from the UK.
The key here being that they are delivered to EU countries where you hold a VAT registration, hence why they are called "EU Tax Jurisdiction" - because they are taxable in another EU country, not the UK.
EU Tax Jurisdiction Sales - Dispatched from the UK would usually incur the following tax rate:
Xero - Zero Rated Income
QuickBooks - 0.0% Z (Zero-Rated 0%)
In your example where "If i sell to an EU customer dispatched from the UK then currently VAT at the UK rate applies?", those sales would not fall into this group unless you hold a VAT registration in the country where the sale is going to. Instead they would be grouped in the "UK Tax Jurisdiction Sales" group.
So to recap, only sales that are taxable in other EU countries where you hold a VAT registration will end up in the EU tax jurisdiction group.