My client is a VAT registered online retailer selling through Ebay, Amazon, etc. They sell to non VAT registered individuals worldwide. My understanding is that if they sell something for, say, £25 + £5 P&P (i.e.: the customer pays £30) then the actual amounts are £20.83 + VAT for the goods and £4.17 + VAT for the postage when they are selling to customers in the UK/EU.
My understanding is also that when they make sales outside the EU then eveything is zero rated.
Can someone confirm I've not misunderstood something here?
Thanks in advance
Replies (7)
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Same VAT rate as goods supplied
Sell a book to a UK or EU consumer = zero rate VAT on the whole price.
Sell a CD to a UK or EU consumer = standard rate VAT on the whole price.
Sell any goods to outside the EU = zero rate VAT on the whole price.
The principle that the VAT rate of the delivery charges follows that of the goods supplied was firmly established in the Plantiflor Ltd case. Plantiflor Ltd had unsuccessfully tried to establish that they were agents of Royal Mail in respect of the VAT exemt postage charges. I believe that, somewhat surprisingly, very recently another mail order retailer has tried the same, and unsurprisingly lost their arguement at appeal.
Strictly speaking
Sales outside the EU are outside of the scope of VAT rather than zero rated.
@neileg
George Attazder is right - if you're selling goods from the UK to a customer outside the EU, the supply of goods is zero-rated rather than outside the scope.
Supplies of services where the place of supply is outside the EU are out of scope, which might be what you were thinking of?
@George @gilderda
Thanks for pointing out my mistake. Not sure what I was thinking but I am clearly wrong!