Google Adwords = register for VAT ?

[jan225]

Hello everyone!
I have a few affiliate websites and I promote some goods or services for commissions. I do not sell anything. Moreover, I have got a full time job, so this is only small "extra business".
I would like to promote my websites via Google Adwords or Facebook. I am registered in the UK for self assessment. But I am not registered for VAT. Google(+Facebook) is Irish Company, so my question is - if I want to use their services, do I have to register for VAT in the UK (like individual, business?) Anyone can help please??

This is what I have found meanwhile (directly on Goole support section): When you create your account, you'll be asked to confirm that your tax status is business. Business status means that you'd like to see an economic benefit from your advertising, such as increased revenue, sales, or signups. This includes affiliates, sole traders, self-employed merchants, partnerships, and others. AdWords can only be used for business purposes in the European Union.
And then: We’ll need your VAT ID.
We don't add VAT charges to your account.
You'll be responsible for self-assessing and paying VAT at your EU member state's local rate (in accordance with Article 44 of EU Council Directive 2006/112/EC).

So my question is, if I will register for VAT, how does it affect me and this small business?

[GlobalTaxAdviser]

Hi

If you are selling Electronic services anywhere in the EU then VAT needs to be charge to consumers at the VAT rate in that country. Yes you will need to register to use the VAT Moss Scheme

From business to business VAT is treated as reverse charge so no tangible VAT impact

Kind Regards

GTA

[jan225]

MOSS? Are you sure???
I do not sell any services, in fact I do not sell anything. I simply have a few affiliate websites, where I promote some goods or services of UK companies and my income are commissions from their sales.

And now, I just want to promote my websites on Google, lets say £200 every month. Google is Irish company, so I have to pay VAT £40 = I have to register for VAT.

And again my question was, how does it incluence me and my affiliate marketing business if I register for VAT.

Thank you for your help

[spidersong]

"I do not sell any services": If you're in business and people pay you money then you are selling something, otherwise they're giving you money for nothing! If you're not selling goods then you're selling services. Advertising is a service.

"so I have to pay VAT £40 = I have to register for VAT" Why? There are lots of businesses that incur VAT that aren't registered for VAT.

"how does it incluence me and my affiliate marketing business if I register for VAT": If you register for VAT you will need to charge VAT to all your customers, so how sensitive to this will your customers be?, can you charge them 20% extra with them either being happy to pay it or being in a position to recover any VAT that you charge them. If registered you would need to submit a return to HMRC every quarter to pay them the VAT that you owe them, against this you will be able to recover VAT you are charged in relation to the supplies you receive for business, so how much will this offset the VAT charged to your customers.

So you need to consider: Will you be better off by registering for VAT or will it mean your turnover drops as customers can't afford you anymore, are your customers likely to be people registered for VAT, or are they small businesses like yourself who aren't currently registered and are therefore price sensitive to a VAT charge.

Also if you are only trading with UK companies then MOSS won't apply to you it'll just be standard accounting.

[jan225]

Hi, thanks a lot for your answer.

And I really do not sell anything. A short explanation, how does it work.
It is called affiliate online marketing: https://en.wikipedia.org/wiki/Affiliate_marketing

For example: a review website where I will compare top 10 hiking boots in 2017(or anything else). To every item I will add links to Amazon. And then, if somebody clicks on that link, he is redirected to Amazon website, where he can buy those hiking boots. If he will do it, I earn a commission from Amazon, for example 5% of the price of boots. So I am not a seller, I am only the owner on my review website.

So, more visitors on my website = more potencial customers for Amazon = more commission earned for me. That's why I would like to pay for Google Adwords advertisment, but Google is Irish company, and therefore I have to pay VAT as I said

[spidersong]

And I really do not sell anything.

No you really do sell something, you sell advertising services. It doesn't matter whether you view yourself as selling something; the law views you as selling something. As I said in VAT law if you're in business and you're not selling goods then you're selling services, those are the only possibilities. Since you are not selling goods you are selling services, the income from which forms your taxable turnover.

As I said before you don't need to register for VAT in order for someone to charge you VAT, if Google refuse to deal with you if you're not registered then you need to look at which is more beneficial for you: not being registered for VAT or using Google Adwords. If Google will deal with you if you're not VAT registered then you need to decide whether it's worth registering for VAT in order to not be charged that £40 VAT. If you register for VAT you will charge VAT to Amazon (who probably won't have any issues with that) and recover VAT on the expenses you incur in generating your income.

As an aside as you are in business I assume you've already registered for self assessment for your Income Tax?

[jan225]

Hi, yes I am already registered for self assessment. I received UTR number from HMRC, and I gave it to an accountant to sort out Income tax for me. Than I have paid it online at HMRC website.

And Google will probably deal with me even without beeing VAT registered. But, they do not add VAT (this is the picture how their Invoice looks like, from Facebook, not mine).

http://i64.tinypic.com/2hrkguo.jpg

On their website it is written that: You'll be responsible for self-assessing and paying VAT at your EU member state's local rate (in accordance with Article 44 of EU Council Directive 2006/112/EC).

[jan225]

So, lets say that Google will send me the same invoice like the one on the picture. There is no VAT on their invoice, so do I have to pay VAT somehow myself?
If yes, how can I do it (or can I do it without registering for VAT at HMRC)?

To be honest, I really do not mind paying that 20% VAT. The more important for me is to learn how to set up Google adwords campaigns, as a part of online marketing that I study.

And guys, thank you for your patience. I really appreciate your help. I live in the UK only 2 years, so I am still learning

[GlobalTaxAdviser]

Hi

If you are VAT registered you will need to account for the VAT through reverse charge since Google are based in Ireland.

Yes like I mentioned earlier VAT will apply if you are selling to consumer in the EU. There are no VAT thresholds if selling overseas and you will have to register in the UK in order to collect the VAT overseas. Not checked if actually meet the criteria for digital services.

There are distance selling thresholds if you are trading in EU to consumers (non digital services)

Suggest you speak to your accountant as they should guide you

Thanks

GTA