Let's say that LTD company is buying products from China (on Aliexpress) and then those products are shipped directly from China to the customer. Problem is that LTD company is not able to get invoices from this service.
1. Can I book such transactions via a bank account? I mean to transfer from bank statement all costs of purchase of those products and all payments from sales of those products, to a special balancing account and settle them on a difference basis? The difference between sales and purchase (margin) will be taxable (company profit is a margin).
2. What if company buy goods in this way and then sell them to Poland? They wouldn't be taxable for VAT in UK, right? The shipping is directly from China to Poland.
3. Does the company have to issue invoices to individual customers? Or only if they request an invoice company will have to issue it?
Replies (6)
Please login or register to join the discussion.
1) No. You should book your sales as sales and your purchases as cost of sales.
2) Correct. No UK VAT if goods shipped direct from CN to PL. There may be Polish VAT - in practice, depends on value of shipment and and vigor with which Polish customs ensure on imports is collected.
3) This will be a local requirement - in some countries (eg Italy) it is mandatory to issue an invoice.
4) You should consider getting an accountant with some experience of international trade. There are many pitfalls for the unwary
[quote=MarkPo]
''I am still unable to account for my company via a balancing account (all inflows minus all outflows regarding the sale)''
Thats why you need an Accountant.
What does your contract say ?
If I go in to a corner shop and buy a Mars bar, the whole 50p is their sales, not just the profit. Because I'm contracting with the corner shop.
I'll say again, you need an accountant. You are very clearly out of your depth.
Firstly, as has been stated, you need an accountant, and one who deals with overseas trade at that.
Secondly, and as important you need to decide what you are doing.
- If you are truly dropshipping, you are acting as principal. Your customer contract is the supply of goods to ghe consumer. Your supplier contract is with the company supplying the goods. The fact the supplier ships directly to the customer is simply "convenient".
- If, as you later suggest, you are acting as agent, that is different - you are an intermediary. However, based on the information provided, this does not appear to be the case in your situation.
Incidentally, you may also wish to clarify that AliExpress is actually the supplier of your specific goods and that they are not actually acting as an intermediary "marketplace"
Finally, and I repeat, engage an accountant!