VAT On Online Sales

joebeaven · Postby **joebeaven** » Thu Apr 17, 2008 1:31 am

Hi,

I run an online buisness selling specialized CDs.

My stock is located in America and I just send the orders over.

Most of my customers are also in America, but I also sometimes sell to Europe and I'm wondering what I need to charge VAT on. Is it just for countries in the EU?

Does the VAT threshold apply to all business I do, or just the sales I make in the EU? I wouldn't expect my turnover to be above the VAT threshold just for sales within the EU.

Thanks,
Joe

pawncob · Postby **pawncob** » Thu Apr 17, 2008 8:00 am

I assume you are located in the UK.
The VAT turnover limit applies to all your sales, including those to the US, so if it's over Â£67k you should be registered.
VAT is chargeable to all EU customers, but not to US customers.

spidersong · Postby **spidersong** » Fri Apr 18, 2008 12:21 am

I'd disagree with pawncob for the following reasons:
The VAT turnover limit applies to all taxable supplies.

A taxable supply is (under Sec. 4 (2) VAT Act 1994) "a supply of goods or services made in the United Kingdom". Section 7 (2) of the VAT Act deals with place of supply of goods and says that where a supply doesn't involve the removal of goods to or from the UK then those goods are supplied where the goods actually are.

If the goods remain in the US and are shipped to someone in the US without going through the UK, their place of supply would be the US and therefore they wouldn't be included in taxable turnover as they are not taxable supplies.

Were the goods held in the UK then they would be exports and included in turnover as pawncob says.

This next bit I have no practical experience on but I'd suggest you look at the US tax regulations to see if you need to register and account for any form of tax over there.

joebeaven · Postby **joebeaven** » Fri Apr 18, 2008 1:58 am

Thanks for the advice. I'll call the VAT helpline for further information.

3pic · Postby **3pic** » Fri Apr 18, 2008 2:06 am

Spidersong's posting is spot on.

If all the stock is held in the USA, then even sales to other EU customers will not be subject to VAT as the supply is still being made outside of the EU. The customer may be subject to duty and VAT at point of entry into the UK or EU if over Â£18 but that will be collected by the courier/postal service and charged onto your customer.

When buying goods from places like amazon.com they state that VAT and duty may be charged at point if entry so the real cost of the item may be more than the advertised price on the website.