Hello!
My client runs an internet business on a self employed basis. He sells to UK customers plus customers in other EU countries in particular Germany, France and Spain. These are all non business customers. He hasnt reached the UK vat registration threshold yet but expects to do so within the next couple of months. I want to make sure we get the vat treatment right. Am I right in thinking he just continues to charge UK vat at 20% until he reaches the thresholds for sales to the individual countries, i.e. in Germany it seems the threshold is 100,000 euro, so once his sales to Germany reach 100k, he has to register there and not charge UK vat?
I have read on the internet that a company selling to Germany must register immediately for German vat regardless of the value of sales. This seems to contradict the above guidance (which i got from HMRC website). I wonder if the distinction here is for limited companies so as a sole trader this is not relevant.
Many thanks
Replies (5)
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UK Rules Rule....
Having been in this situation myself, the advice I got was very much that your client should follow UK rules, unless he is selling so much to any one country that those sales breach their threshold.
Thus (purely talking B2C transactions for simplicity's sake), once he gets to the point of registering for VAT in the UK and charging VAT to his UK customers, he should also start charging 20% VAT to any customers in the EU.
Although every EU member state has a raft of rules which apply to E-Commerce (both VAT and other regulations), it seems that the general approach is that as long as you are following the rules in your home state the others won't come after you, at least until yo ubecome a big player (or do anything which smacks of carousel fraud...)
For ordinary sales from the UK, yes, it's just a standard VAT invoice. Although my experience so far has been that e-commerce software and services are either written in America and don't understand or handle VAT very well (eBay are a prime example !), or are written in the UK and don't get that you can sell things outside the EU !
Although I've looked at Amazon Fulfilment, I've only done it from a UK perspective, so I have to hold my hands up and say that I don't know enough about it to be sure of the correct VAT treatment of using warehouses in multiple countries. Hopefully he's done the maths to compare the saving in postage costs and potential competitive advantage with the cost of holding multiple sets of inventory and moving stock to the relevant fulfilment centre. With luck someone else with a deeper knowledge of cross-border VAT rules will be able to help !