Internet traders and sales outside UK

Internet traders and sales outside UK

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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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By Alonicus
06th Feb 2012 12:15

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...)

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By imbs
06th Feb 2012 12:29

Many thanks for that.  I'm

Many thanks for that.  I'm glad you have come to the same conclusion. So does your client just raise a normal looking UK Vat invoice?

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By imbs
06th Feb 2012 13:04

Another twist.  He is now

Another twist.  He is now selling via Amazon Fulfilment.  Have you heard of this?  He will ship his goods directly to the Fulfilment centres in Germany and France and these will be dispatched directly to the customers in that country by Amazon.  I am now concerned that this complicates matters more.  Would this be classed as consignment stock?

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By Alonicus
06th Feb 2012 18:26

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 !

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By imbs
07th Feb 2012 10:25

Thank you so much for your help!

I have found out that all of his stock will sit in the UK so thankfully I dont have to delve into the vat issues of the fulfilment centres in other countries - he says its too expensive. 

But I understand that if he does decide to go down the route of delivering stock to German fulfilment centre for example, then  he comes under the German vat system because the vat treatment follows the stock.  But hopefully he doesnt decide to do this!

many thanks again!

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