Hello,
Basically, my website sells subscriptions/advertisements. My customers are individuals around the world, but 90 percent of my turnover is to individuals outside of the EU. My turnover inside the EU is nowhere near the VAT threshold. I have a vat enquiry form, I know I do not have to pay Tax. However, 2 accountants I have spoken to have given me 2 reasons why I should not, any one have experience with this? Here are two reasons,
1/ My members are outside the scope of VAT as they are based outside of the EU. No VAT is charged on transactions. VAT is charged on transactions to members inside the EU providing I go over the threshold
2/ My credit card processor is based outside of the EU and therefore VAT is not payable on ANY transactions, whether in the EU or outside of the EU. This is because my credit card processor controls my usernames and passwords, and therefore I'm a customer of the credit card processor. I'm very weary about this one
regards,
Mark
Replies (8)
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Both answers are correct
However, you need to ascertain who your customer is? If your customers are the end users 1) is correct and if your customer is the CC processor then 2) is correct.
I thought ...
... place of supply in Business to Individual was where seller belongs, for Business to Business where buyer belongs?
So, 1 is vatable UK turnover, 2 is not!
Personally, with the possible costs of getting it wrong it is worth a couple of hundred pounds getting written advice from a VAT specialist.
Place of Supply rules
The place of supply of intangible services to non registered customers established outside the EU is the place where the customer is established and is therefore outside the scope of UK VAT. If you want to pay me a couple of hundred pounds as Old Greying Acct suggests please pm me I am happy to send you a bill>
Does the off shoring argument really hold up?
If you are the controlling mind of the business and are the key driver for the business, business generation etc then I really struggle to see how your business is offshore (and not UK established) and why charges to UK/EU customers are not within the scope of UK/EU VAT (subject to any VAT regsitration threshold). I would hesitate to try and use an offshoring argument as this is an area fraught with risk.
If the business was even to be offshore (and your customers are B2C) then you are likely caught by the Electronically Supplied Services rules when supplying EU customers and the One Stop Shop (and I believe there is no VAT registration threshold for such supplies).
Assuming you are established in the UK then the 2015 mini one stop shop rules (assuming your customers are B2C) arecoming into force on 1.1.2015 may also apply for your non UK customers established elsewhere in the EU.
If only B2B then it may just be easier to get UK VAT registered when you get near the threshold.
If you are earning a commission for bringing suppliers and customers together then the B2C VAT rules would be different but the B2B ones would not (just in case it makes a difference ).
These may be of use
http://www.hmrc.gov.uk/manuals/vatpossmanual/VATPOSS13550.htm
http://www.hmrc.gov.uk/manuals/vatpossmanual/VATPOSS15500.htm
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_PROD1_029955#P46_6655 (section 14 + 15 in particular)