'Arm's length trading and 'distance selling' what are they and what is the difference (if any)?

They are very different indeed. Arm’s length trading is an expression used in relation to the GATT Valuation rules. It is used as an expression in section 30.1 of Customs notice 252 which is the section that explains how to demonstrate that you do not get a reduced price on the goods you are valuing for customs purposes at import if you are related (in the business sense) to the party who has consigned the goods to you from overseas. ‘Distance selling’ on the other hand is a term used to describe supplies of goods from one Member State to a person in another Member State where

  • The customer is not registered for VAT and
  • The supplier is responsible for delivery of the goods

The recipients of distance sales will mainly be private individuals. The rules are intended to transfer the place of supply to the Member State in which the customer receives the goods. The rules are intended to combat distortion of trade and unfair competition because of the lack of harmonization of VAT rates across the EC

 

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