VAT ON IMPORTING AND EXPORTING

suey71

Hello. I'm thinking of setting up an Online Business and I will have to import from a distributor in Germany and hopefully sell across the EU as well as Ireland.
I'll be registered as a sole trader.
I'm doing a Start Your Own Business Course with the Fingal County Enterprise Board and the Lecturer recommended that a start up should not register for VAT until they reach the 75,000 treshold which I kind of understood but what knocked me for 6 was when she said that if a company/business is importing from EU then they dont have to pay VAT to the country they're buying from.
And when a company/business is selling to EU/outside of Ireland customers, that the customers are exempt from paying VAT on the products being sold to them by the online seller.

Every time I've bought goods over the net from say UK. I've always had to pay VAT. Should they have charged me VAT?

Please reply as this will have a big effect on my pricing and profit margin.
Plus I don't want to get stung with a huge VAT bill for overseas trade if I don't charge VAT.

ps. I don't want to register for VAT until I reach the above treshhold.
Thanks.

Wolff

if you are registered for vat with a vat no then anything you buy from the uk is without vat

does not apply to normal purchases for us joe schmo's

suey71

Yeah this is what I was thinking too. but she was adament that NO you dont pay VAT. on imports or exports. She's aLecturer in UCD.
If I don't reg. for VAT what then.

15 of us couldn't have all taking her up wrong, we all questioned her on this. v.very odd.
Personally I'd go with you on this. Thanks.

Teej

Each country in the EU that you sell to will have a different threshold whereby if you sell goods above that amount in that country you must register for their VAT and charge their rate of VAT on those goods - can be anything from 35k (or even lower) to 100k depending on country. Hence the reason many companies won't deliver to Ireland and charge us more

There is also a different registration threshold in Ireland when you buy goods from other EU countries - once above this you will have to pay Irish VAT on your acquisitions instead of German

Technically importing and exporting does not include trade with EU countries so that is why although exporting/importing is zero rated you pay VAT on orders from the UK

suey71

Hi teej

"There is also a different registration threshold in Ireland when you buy goods from other EU countries - once above this you will have to pay Irish VAT on your acquisitions instead of German"


What happens if I'm not VAT registered in Ireland?

RUDOLF289

Hi Suey71

First of, if you send me your e-mail address by PM, I will e-mail you the VAT Guide 2008. Obviously there has been ammendment in the VAT rate, since it was increased from 21% to 21.5%. There may be some additional (minor) changes, but that is the latest guide as published by the Revenue commissioners.

You need to register for VAT if your turnover exceeds Euro 41000 for persons making Intra Community Acquisitions (i.e. goods you buy in other EU member states) or Euro 75000 for persons supplying goods. (nb : for person read any entity involved in trade, i.e. sole trader or limited company)

If you are registered for VAT in Ireland, your EU based supplier can supply you at a zero rate of VAT.

To quote directly from the VAT Guide 2008;

The supply of goods by a VAT-registered trader in one EU Member State to a VAT-registered trader in another EU Member State normally qualifies as an intra-Community supply. A VAT-registered trader in the State may zero-rate the supply of goods to a customer in another EU Member State if:
• the customer is registered for VAT in that other EU Member State,
• the customer’s VAT registration number (including country prefix) is obtained and retained in the supplier’s records,
• this number, together with the supplier ’s VAT registration number, is quoted on the sales invoice,
• the goods are dispatched or transported to that other EU Member State.

You need to be aware that a VAT-registered trader in the State making any zero-rated intra-Community supply of goods must submit the relevant periodic VIES statement to the VIMA office in Dundalk.

However, if your clients (i.e. the people you are supplying) are not registered for VAT than you need to charge VAT at the Irish rate (most likely 21.5%) upto the treshold that applies in the respective jurisdiction your client(s) is/are based. Once you exceed that treshold you would need to register for VAT in that jurisdiction and file the appropriate VAT returns in those jurisdictions.

The next thing is : INTRASTAT returns

Traders engaged in intra-Community trade are also obliged to make a periodic INTRASTAT return, for statistical purposes, where the value of goods acquired by them from other EU Member States exceeds Euro 191,000 per annum or the value of goods supplied by them to other EU Member States exceeds Euro 635,000 per annum.

Further information on the VIES and INTRASTAT returns is available from the VIMA Office, Government Offices, Millenium Centre, Dundalk, Co. Louth. – Phone number (042) 9353700 or LoCall 1890 251010, or by email to vimahelp@revenue.ie.

In relation to your VAT3 return you need observe the following ;

1) In box E1 you need to record the value of sales to other EU countries
2) In box E2 you need to record the value of Goods received from other EU countries
3) In box T1 you need to record the total VAT liability of goods and services supplied plus intra EU acquisitions and parcels imported VAT free
4) In box T2 you need to record the total deductible VAT in respect of your purchases and Intra EU acquisitions and VAT paid on imports from outside the EU

If you are not registered for VAT in Ireland, you will have to pay the VAT that your EU based suppliers are charging you and you can not claim that VAT back. If you are VAT registered your EU based suppliers will charge you without VAT, and the VAT becomes "neutral", i.e. you enter a liability for VAT in Box T1 and in Box T2 you claim that liability back, so that the result is zero (VAT Neutral).

I believe that the VIMA office will be able to tell you the tresholds that apply in each member state.

I hope this goes someway to clarifying the issue. Whilst I do have some experience with VAT, Intrastat and VIES, I would not class myself as an expert. My expertise lies in transportation / distribution / import / export.
Certainly if you have any transport related questions, I would be happy to provide assistance on same.

I would suggest that once you have the VAT guide, to bring it into your lecturer and work through the issues you have raised in your post. Best of luck if you decide to set up a business.

Regards,
Rudolf289