maniek00000
Contributor
User Power
Value/Post Ratio
83%
- Jul 30, 2013
- 24
- 20
when you set your items price when importing goods, you sum: item price, shipping, VAT and then you put your margins. This way your customers will pay VAT, not you
Join over 90,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.
Free registration at the forum removes this block.What about the scenario where it's above 50$. Then if I don't collect VAT for them, the customer pays it at their door. But if I collect it, who do I give VAT to and what is the talk about the 82000 threshold?
You can get a US company and bank account without visiting America using this: Stripe.com/atlas
As long as you are shipping from outside the EU, the item will/should be taxed at the border (but for small packages, it mostly isn't). So for packages valued at less than 50$, it's a competitive advantage to be incorporated and ship from outside the EU because it probably won't get taxed (and you can invoice it as an export ex-VAT, while an EU business can't because the customer is inside the EU)
There are companies like Gearbest and Bangood doing high volume fraud, they found a way to put high value packages inside the EU without passing customs (idk how they do it, It enters via UK and then redirected to other countries). What I do know is that I can order a 300$ tablet from Gearbest and not pay VAT, will be here in a week. If I go to the store on the corner the owner will need to charge 300$+23%VAT.
As long as you are shipping from outside the EU, the item will/should be taxed at the border (but for small packages, it mostly isn't). So for packages valued at less than 50$, it's a competitive advantage to be incorporated and ship from outside the EU because it probably won't get taxed (and you can invoice it as an export ex-VAT, while an EU business can't because the customer is inside the EU)
There are companies like Gearbest and Bangood doing high volume fraud, they found a way to put high value packages inside the EU without passing customs (idk how they do it, It enters via UK and then redirected to other countries). What I do know is that I can order a 300$ tablet from Gearbest and not pay VAT, will be here in a week. If I go to the store on the corner the owner will need to charge 300$+23%VAT.
You can get a US company and bank account without visiting America using this: Stripe.com/atlas
What about the scenario where it's above 50$. Then if I don't collect VAT for them, the customer pays it at their door. But if I collect it, who do I give VAT to and what is the talk about the 82000 threshold?
Thank you @Phones for a clear explanation
I think you might be overstating the problem - almost all UK businesses do pay VAT, and they somehow manage to turn a profit. It might not be worthwhile pursuing a business venture in which paying the same taxes everybody else does loses you money. As Walter Hay pointed out, the trick is to find sources that do allow you to earn your profits. It might be that the supplier's deal isn't good enough - maybe you have room for negotiations?
Which is what people actually do. As I wrote above, the VAT is for the customer. After your fiscal term is over you get VAT returns for ALL the items and services you bought for your business that you have an invoice for. Then you substract this amount from the VAT you paid during sales and that's your actual balance. So the 20% is actually 20% from all your sales minus 20% from all the goods and services you purchased that count as your operating costs. That's the actual balance.
This is what I mean when I say that VAT is paid by the customer - businesses get returns for their costs. In your example, if you paid 60$ for the product in the UK, then 12$ of that sum (0,2*60) is VAT. So after you sell the ebook for 100$ and pay 16,7$ VAT ((83,3*0,2) + 83,3 = 100), your actual VAT balance is -4,7$ (16,7-12). This is discounting all the other goods and services you might have paid for, such as hosting or marketing, 20% of which is also VAT and can be deducted if you have an invoice. While companies are offered net prices, they still pay gross and get a refund later on.
You can have our online store priced in $, and accept USD through paypal. You don't need to be based in the US to do that. People can pay him using their cards from anywhere.@Sanj Modha How do you manage with selling outside of the EU?
The US is interesting in particular of course. Do you have a USD denominated bank account? Collect sales taxes?
There seems to be a grey area around the sales tax issues, from what I've read if you were shipping the product to america and having it shipped out from your own warehouse or FBA etc. it would raise a liability for sales tax based on:
http://www.salestaxsupport.com/blog...gn-sellers-should-know-about-u.s-state-taxes/
Have you discussed any of this with an accountant?
....
I recommend consulting the issue with an experienced accountant if you're serious about this idea. At some point you have to pay an expert or read a lot of boring regulations if you want to be sufficiently informed on the ins and outs of your venture.
I work with suppliers/vendors in the US so that takes care of most of my problems. I also use Shopify who collect sales taxes at the point of purchase based on the customer's state.
If you're shipping products into the US then it's another ball game. Read up on Amazon FBA blogs. There's lots of useful information within that community.
Join Fastlane Insiders.