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Tax: UK based company as an agent for EU B2C

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I have a question how to treat correctly for tax purposes this sutation:

There is a business in Bulgaria that sells shampoos, we agree on agent services with them, we place their shampoos on our website.

Then customer from Italy orders those shampoos, we receive money to the UK account, then we take commision and trasfer rest to Bulgarian business.

We are a middle party between Bulgaria and Italy, however money are going through our accounts. How to correctly account for VAT in this instance?

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10th Jul 2019 11:53

As you’ve described it, you are making taxable supplies of marketing and payment handling services to the company in Bulgaria. The general rule says that the of supply is Bulgaria and so you should zero-rate that sale. The payment handling part may be Exempt – which may mean you have to restrict some of your input tax recovery.

The supply of goods to consumers in Italy is subject to Bulgarian VAT if the value is below the distance selling threshold of €35,000. If the value is above this, the Bulgarian company will have to register for Italian VAT.

BUT, this will all depend on the exact contractual arrangements between the parties and the detailed facts. The advice may change considerably if, for example, Bulgaria invoices UK for the value of the goods.

You should get advice from someone with access to the contracts and other documents.

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By rekahiy
to paul.benny
10th Jul 2019 12:10

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By rekahiy
to paul.benny
10th Jul 2019 12:10

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By rekahiy
to paul.benny
10th Jul 2019 12:11

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By rekahiy
to paul.benny
10th Jul 2019 12:10

Thanks, Paul.

Yes, UK company creates an invoice for goods to Italy customer (B2C from UK), and then Bulgarian company creates an invoice for UK company for goods that UK company sold for them. After trade is executed on the website, goods are directly send to Italy from Bulgaria, UK company has a liability to pay for goods to company in Bulgaria.

Is it possible to contact you directly for further advice?

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to rekahiy
10th Jul 2019 12:29

That's not the same as you described in your question.

That's why you need to get some advice from someone who can review the contract and documents to understand the exact nature of the transaction.

If I held a practising certificate from my professional body, I would be pleased to provide direct advice (for a fee). But I don't.

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