Drop shipping model Taiwan-EU-UK

[Pacific]

Hi,

I'm new to this amazing forum packed with very good information. Thank you for this. I really appreciate it.

Here is my case study, I would appreciate if someone could help me in solving the dilemma.

I run an UK limited company recently set up which parent is based in Taiwan. The parent is the main supplier to the UK limited company. The uk limited company was set up to supply the whole EU countries so that Taiwan can concentrate in Asia. We sell bicycles. We keep some stock in the UK to sell to UK customers and recently have had an order from an Italian company which is VAT register in Italy so ensuring they genuinely where VAT reg, we proceeded to ship the bicycles to Italy and zero rated the sales invoice. So far so good.

Now our client has come back to us with an enormous order and we don't hold this stock in the UK. We believe that the most practical think would be to ship the order directly from Taiwan by-passing the UK but issuing an invoice from UK.

The idea is: 1- we purchase the goods from Taiwan (no VAT as the goods don't touch UK land) and goods the remain in Taiwan until they ship the goods. 2- The uk company issues a sales invoice zero rated to Italy for an agreed price. 3- Italy receives the goods, pay import duty and italian VAT.

Does this sound right from the HMRC legal and taxable point of view?

By the way some of the models we sell have been designed by British designers. I don't want to make publicity just in case.

Cheers guys.

[Generix]

Hi,

I'm new to this amazing forum packed with very good information. Thank you for this. I really appreciate it.

Here is my case study, I would appreciate if someone could help me in solving the dilemma.

I run an UK limited company recently set up which parent is based in Taiwan. The parent is the main supplier to the UK limited company. The uk limited company was set up to supply the whole EU countries so that Taiwan can concentrate in Asia. We sell bicycles. We keep some stock in the UK to sell to UK customers and recently have had an order from an Italian company which is VAT register in Italy so ensuring they genuinely where VAT reg, we proceeded to ship the bicycles to Italy and zero rated the sales invoice. So far so good.

Now our client has come back to us with an enormous order and we don't hold this stock in the UK. We believe that the most practical think would be to ship the order directly from Taiwan by-passing the UK but issuing an invoice from UK.

The idea is: 1- we purchase the goods from Taiwan (no VAT as the goods don't touch UK land) and goods the remain in Taiwan until they ship the goods. 2- The uk company issues a sales invoice zero rated to Italy for an agreed price. 3- Italy receives the goods, pay import duty and italian VAT.

Does this sound right from the HMRC legal and taxable point of view?

By the way some of the models we sell have been designed by British designers. I don't want to make publicity just in case.

Cheers guys.

Ok this is fairly simple.

(1) The Taiwanese co has to first make a sale to the UK co for the goods. This should made 'on the high seas' (on a T1 status /EU uncleared basis).
(2) The UK can then make a DAP sale of the bicycles to the Italian customer delivered direct to the customers port of choice, the customer will be - as you suggest, responsible for the import VAT and Duty.
(3) You do not need to issue a zero-rated VAT invoice from the UK co for this supply, as it is outside the scope of UK VAT (i.e. not an export from the UK as goods never enter the UK).