VAT Online Business

[isha]

Help!

I have set up an online website as a sideline business and when I was just about to launch I thought what about taxes in different countries. eg VAT.

The shop is for European customers only for the moment as it is linked to drop shipping and I am presently trying to wade through the complications of the extra duties being charged on supplies from US and UK as opposed to European based drop shippers from my supplier.
So my supplier is now solely European based to European customers only - but I see VAT rules changed in July 2021.

The site is based around a Wix ecommerce website so I see I can automate and add the tax rate applicable per European country. I can select to have it charged at checkout. Do I add Irish rate or the countries rate?

I am so far not registered for VAT - should I be? It is likely to be a very small business at least for a good while.
I might sell nothing. I HAVE sold nothing so far! It may be another of my many pipe dreams. Should I wait and see?

From 1 July 2021, online sellers of goods should charge VAT in the EU Member State of their customer (i.e., where the goods are shipped to), unless the total value of their distance sales to consumers in all other EU Member States does not exceed €10,000 per year.

https://home.kpmg/ie/en/home/insights/2 ... per%20year.

Do I then pass on the VAT charged to Revenue? When I do my tax returns or on an ongoing basis? I see this in the above advice re OSS - is this the way to go or again should I wait?
How is the drop shipper involved in any of this? They get the initial money when the item is bought and I get the profit per item, as I have set it up, is what I think happens - so they have the VAT sent to them included in the purchase price - do they pass that on to me then automatically so i can send to revenue?

VAT on sales to consumers in other EU Member States, as well as Northern Ireland, should be reported in a quarterly One Stop Shop (“OSS”) return. If a seller does not register for OSS, they are obliged to register for VAT in each Member State into which they sell. As this is unlikely to be attractive to most sellers, online sellers should take steps to register for OSS (via ros. ie) as soon as possible if they have not already done so.

Everything I am reading about this is so complicated - can anyone tell me the simple thing to do?

Feck. This has become far more complicated than I wanted it to be.

[JONJO THE MISER]

In case you don't get many answers here, try the forum askaboutmoney, people there are usually helpful.

[Guburnor]

In case you don't get many answers here, try the forum askaboutmoney, people there are usually helpful.

No idea about the tax situation, best of luck with the business, if you go to askaboutmoney tell the helpful people there that people here are usually better fun

[Scotty]

Feck. This has become far more complicated than I wanted it to be.

Are you registered for VAT?

If you plan on turning over more than €37,500 a year you'll have to. If not, you don't have to but you won't be able to claim the VAT back on your purchases.

If you are selling to private individuals, Business to Customer (B2C), then you charge Irish VAT on the sale and that's the end of it, they're not liable for any further VAT or duties*. If you sell to other businesses (B2B) then you collect their VAT number at POS and you don't charge them VAT (well, you do, but it's 0%, called Intra Community Supply) and you account for it on your monthly, or quartely VIES return.

The easiest way is just treat everyone as B2C unless you are specifically targeting B2B.


*alcohol, tobacco, fuel, have different rules.

EDIT: Sorry, read your post properly and see you're not registered yet. Give it a few months and see how it goes but remember you will have to pay vat your invoices which you can't claim back. My wife's best friend is a drop shipper for a major UK brand, she makes 30% commission and did over €1m in sales last year working about 4 hours a week at her kitchen table. Drop shipping was very lucrative a few years ago but it's harder to find the golden goose these days.

[isha]

Are you registered for VAT?

If you plan on turning over more than €37,500 a year you'll have to. If not, you don't have to but you won't be able to claim the VAT back on your purchases.

If you are selling to private individuals, Business to Customer (B2C), then you charge Irish VAT on the sale and that's the end of it, they're not liable for any further VAT or duties*. If you sell to other businesses (B2B) then you collect their VAT number at POS and you don't charge them VAT (well, you do, but it's 0%, called Intra Community Supply) and you account for it on your monthly, or quartely VIES return.

The easiest way is just treat everyone as B2C unless you are specifically targeting B2B.


*alcohol, tobacco, fuel, have different rules.

EDIT: Sorry, read your post properly and see you're not registered yet. Give it a few months and see how it goes but remember you will have to pay vat your invoices which you can't claim back. My wife's best friend is a drop shipper for a major UK brand, she makes 30% commission and did over €1m in sales last year working about 4 hours a week at her kitchen table. Drop shipping was very lucrative a few years ago but it's harder to find the golden goose these days.

Thanks Scotty. I would love to turn over more than 37000 but I have had online businesses before and they usually end up quite small, and I am not under any illusions. It seems lower than 10000 turnover one does not have to register at all. And above like you say if I want VAT back then I would register. When you say claim VAT back do you mean from my supplier or revenue? - sorry for being a complete dunce on this subject.

If you look at the KPMG piece above it does say

From 1 July 2021, online sellers of goods should charge VAT in the EU Member State of their customer (i.e., where the goods are shipped to), unless the total value of their distance sales to consumers in all other EU Member States does not exceed €10,000 per year.

The Wix site does have the facility to add each country and it automatically suggests their existing VAT rate (or the other name that country uses for equivalent tax). So it seems that even B2C is per customers country VAT rate (??)

Also my drop shipper gets paid - do they pay me the VAT? while they are paying me my percentage profit?
To clarify - it is a print company, they supply the clothing, I supply the designs and they link the product they supply but I have designed to my site - then they do all the printing, posting etc and they get paid. I have set a profit margin I want from them. But where is the VAT I am now adding going to go? And what do i do with it?

[isha]

I will write to my printer - they are in US - you would not believe how vague and inane and helpless their customer service people are. But unfailingly fcuking polite - I would much prefer rude but smart!

[Scotty]

Also my drop shipper gets paid - do they pay me the VAT? while they are paying me my percentage profit?
To clarify - it is a print company, they supply the clothing, I supply the designs and they link the product they supply but I have designed to my site - then they do all the printing, posting etc and they get paid. I have set a profit margin I want from them. But where is the VAT I am now adding going to go? And what do i do with it?

Yea you see this is different. My friend above is not VAT registered and I've been telling her for years she's going to prison but she was audited by revenue about 3 years ago and they said it was all above board. She is paid as an agent for the brand, so they are the ones actually issuing the invoice (to her) and they declare the vat and she's simply paid a commission. I actually still don't believe it's legal as she's issuing receipts (not invoices) and the customer never gets a VAT invoice. I don't think the shipper is declaring VAT on the whole sale, only what's left after she takes her commission. But anyway...

If you are not a business or sole trader and are simply acting as an agent for the shipper then you wouldn't need to register for VAT.

When you say claim VAT back do you mean from my supplier or revenue?

Revenue. But you don't really claim it back, you don't pay it in the first place. You just account for it in your returns and pay whatever you're liable for at the end of the year.

I wouldn't be going registering for VAT in every country. There's a lot of VAT things you're supposed to do which aren't actually enforced. Before Brexit I was selling lots a year in the UK and was well over the threshold but never registered for VAT there.

Do you know any accountants or book keepers? They'd be best to give pointers though since Brexit they seem pretty clueless too.

The most important thing is to keep a paper record of everything so that if you do have to register or go to an accountant you have a record.

[isha]

Yea you see this is different. My friend above is not VAT registered and I've been telling her for years she's going to prison but she was audited by revenue about 3 years ago and they said it was all above board. She is paid as an agent for the brand, so they are the ones actually issuing the invoice (to her) and they declare the vat and she's simply paid a commission. I actually still don't believe it's legal as she's issuing receipts (not invoices) and the customer never gets a VAT invoice. I don't think the shipper is declaring VAT on the whole sale, only what's left after she takes her commission. But anyway...

If you are not a business or sole trader and are simply acting as an agent for the shipper then you wouldn't need to register for VAT.

Revenue. But you don't really claim it back, you don't pay it in the first place. You just account for it in your returns and pay whatever you're liable for at the end of the year.

I wouldn't be going registering for VAT in every country. There's a lot of VAT things you're supposed to do which aren't actually enforced. Before Brexit I was selling lots a year in the UK and was well over the threshold but never registered for VAT there.

Do you know any accountants or book keepers? They'd be best to give pointers though since Brexit they seem pretty clueless too.

The most important thing is to keep a paper record of everything so that if you do have to register or go to an accountant you have a record.

Thanks again. I appreciate it.

I have left UK completely out of my potential market for the moment as I did a pre launch test last year and there are extra costs now re delivery and random charges from EU countries if UK is involved.

I will consult someone who is an accountant. This has me all very confused. I have been keeping books for decades for various self employment businesses I have operated, it's just this is quite different with the drop shipping etc. Before it has been fairly straightforward as I manufactured or imported the goods I sold, or supplied services that were not goods, and sold them on direct from me with no intermediary, so it was just me and the tax man sorting things out at the end of the year. Simple.
This is very enervating - not fun. I was all ready to launch today but I guess another while will have to be spent. Another possibility is waiting to see if anything happens at all with the business, as I might likely sail well below the VAT line altogether.
I was hoping for a peaceful day!

[CelticRambler]

To clarify - it is a print company, they supply the clothing, I supply the designs and they link the product they supply but I have designed to my site - then they do all the printing, posting etc and they get paid. I have set a profit margin I want from them. But where is the VAT I am now adding going to go? And what do i do with it?

Unless I'm missing something critical, from what you've described you're not adding a profit margin - you're defining the rate you want/will accept as a royalty payment. I have some pieces on Zazzle and it functions in the same way: I supply the artwork, specify what physical items on which I want it to appear and the percentage mark-up on the basic price I want for myself as a royalty. If or when someone orders a card, mug, t-shirt or whatever with my artwork on it, it's Zazzle who handles every aspect of the sale (including printing and delivery); my only involvement is to be the recipient of a royalty payment.

They provide widgets that enable me to feature my artwork on my website, but these link back to their website and every aspect of the sales, wherever the customer is based, is handled by Zazzle.

As a French resident, I am entitled to earn 44,500€ in royalties per annum before being required to account for VAT; Zazzle knows I'm not a "power user" on their platform, so they pay me the full amount as and when it falls due. The taxman doesn't get involved in any way.

[isha]

Unless I'm missing something critical, from what you've described you're not adding a profit margin - you're defining the rate you want/will accept as a royalty payment. I have some pieces on Zazzle and it functions in the same way: I supply the artwork, specify what physical items on which I want it to appear and the percentage mark-up on the basic price I want for myself as a royalty. If or when someone orders a card, mug, t-shirt or whatever with my artwork on it, it's Zazzle who handles every aspect of the sale (including printing and delivery); my only involvement is to be the recipient of a royalty payment.

They provide widgets that enable me to feature my artwork on my website, but these link back to their website and every aspect of the sales, wherever the customer is based, is handled by Zazzle.

As a French resident, I am entitled to earn 44,500€ in royalties per annum before being required to account for VAT; Zazzle knows I'm not a "power user" on their platform, so they pay me the full amount as and when it falls due. The taxman doesn't get involved in any way.

Thanks Celtic. Mine is very similar but different drop shipping company and all sales happen on my site not via widget. I am going to get proper professional advice on this as the Tax/VAT thing does seem to be an important issue. And tax stuff scares me.

[isha]

A preliminary thing I am beginning to understand is that while sales threshold for goods is 75000 euros in Ireland before VAT registration is required, there is a new thing introduced last year called Intra-community Distance Sales and this threshold is 10,000 euros.
This might apply to you and me, Celtic.

https://www.revenue.ie/en/vat/goods-and ... index.aspx

https://www.revenue.ie/en/vat/vat-regis ... holds.aspx