EU VAT - is the supplier right to charge me VAT?

[MaryMary]

Hello and thanks for reading my post. Really hope someone can help as I’m a new business owner and feel a bit screwed :/

Here is a brief overview of my business:

- I run an ecommerce website with children toys
- I’m a sole trader, not registered for VAT
- My supplier is in Poland

When signing the contract with my supplier, I believed I wouldn’t have to pay VAT on my stock purchases as I’m importing goods from the EU. We agreed on prices, and I’m supposed to be making around 30% margin on every sale.

However, when my supplier found out that I’m not VAT registered they said that they have to charge me VAT. Are they right??

The problem is that even if I register for VAT, I can’t charge my customers any more… our prices are already high as it’s a very upmarket product!

I don’t have many options to claim VAT back on. My main costs are Google Adsense and Facebook ads, and they don’t charge VAT because it’s the EU. (Here is a thought, Google and FB don’t charge VAT even though I’m not VAT registered, so why does my supplier do?).

Please help as I’m at my wits end!

[GlobalTaxAdviser]

Hi Mary

Technically not but lot of of EU countries do and there isn't much you can do about it.

They need evidence and a VAT number to your supplier will prove you are a business and not a consumer.

You probably can claim the VAT back from the EU Refund scheme but that may take a while to get the VAT back and will hit cashflow in the interim. If you are going to be purchasing large quantities from Europe then suggest you get a VAT number

Kind Regards

GTA

[robbob]

When signing the contract with my supplier, I believed I wouldn’t have to pay VAT on my stock purchases as I’m importing goods from the EU. We agreed on prices, and I’m supposed to be making around 30% margin on every sale.

However, when my supplier found out that I’m not VAT registered they said that they have to charge me VAT. Are they right??

Your supplier is correct, you need to suffer the vat which is an extra cost to your business , this generally puts you in the same position as you would be had you bought the goods from a uk supplier where vat would almost certainly have been charged.

confirmation heer

Not VAT registered
If you are not VAT registered and receive goods from other countries in the EU, your supplier will charge VAT at the local rate in the EU country from which the goods are supplied. If you‘re not already registered for VAT in the UK and buy goods worth £81,000 or more in the UK from other EU countries, please read VAT registration for further information.

https://www.gov.uk/guidance/vat-imports ... rom-abroad

I don’t have many options to claim VAT back on. My main costs are Google Adsense and Facebook ads, and they don’t charge VAT because it’s the EU. (Here is a thought, Google and FB don’t charge VAT even though I’m not VAT registered, so why does my supplier do?).

strangely the rules for services allow this situation in that all they need is evidence that you are in business for them to have the right not to charge you local vat.

[GlobalTaxAdviser]

Apologies you will not be able to claim the VAT back through the EU VAT refund scheme

Kind Regards

GTA

[MaryMary]

Hi and thanks so much for getting back to me!

It looks like I won't be registering straight away as I'm better off paying the 23% Polish VAT on wholesale prices than 20% VAT on retail prices over here. I don't have any costs to claim back the VAT on...

Or am I missing something??

[robbob]

Or am I missing something??

No - as long as the majority (rough est) of your customers are not themselves vat registered.

[fahadfayyaz94]

I understand your frustration. It can be difficult to navigate the VAT rules, especially when you’re not VAT registered.

Your supplier is correct that they have to charge you VAT if you’re not VAT registered. This is because the VAT is due on the sale of the goods, not on the purchase. When you import goods from the EU, you’re technically the importer, even if you’re not VAT registered. Therefore, you’re liable for the VAT on the import.

If you register for VAT, you’ll be able to reclaim the VAT that you pay on your imports. However, you’ll also have to charge VAT on your sales. This could mean that you have to raise your prices, which could hurt your sales.

I have found this <a href="https://vatcalculatorg.com">VAT Calculator tool</a> quite helpful during my research and you can also use it for your business.

One option that you could consider is to register for the Import VAT Accounting Scheme (IVAS). This scheme allows you to pay the VAT on your imports when you make your VAT return, rather than when you import the goods. This could give you some breathing room, as you wouldn’t have to pay the VAT upfront.

Another option is to find a supplier who is willing to sell to you without charging VAT. This could be difficult, but it’s worth a try.

Finally, you could consider selling your products in a different way. For example, you could sell them through a marketplace that charges VAT on your behalf. This would mean that you wouldn’t have to deal with the VAT yourself.

I hope this helps!