VAT for starpup importting from Europe & selling here

stephencaso

VAT Question
I want to set up a business buying stock from the uk & mainland Europe and selling it here. I have been looking at information about VAT. I am assuming I will not have to pay any duties on bring stock into Ireland from the UK or Europe as its part of the EU.

I am predicting my sales will not be over 70 K for at least the 1st year so I am thinking I don’t have to register for VAT. But I am assuming I will need to be registered for VAT for suppliers to deal with me.
So I am guessing I have 2 options, Register for Vat or Don’t Register for Vat

Register for Vat
I buy stock, give the supplier by Vat Number and they charge me 0% Vat. I sell my sock and pay 21% Vat on the Sales Price.

Example:- I pay 1000 for stock and 0% VAt
I sell for 2000 which means I have to pay 21% Vat ( 420)

So my profit here would be 2000 – 420 -1000 = 580

Don’t Register for Vat
I buy stock, pay the suppliers VAT. I sell the stock and don’t pay anymore VAT and cannot claim back the original VAT paid to supplier

Example:- I pay 1000 for stock and 21% VAT (What ever the VAT is in the country the suppier is based) So my total cost for stock will be 1210.
I sell for 2000 and pay 0% Vat (0)
So my profit here would be 2000 – 210 -1000 = 790

So if I don’t register I will make 790 profit compared to 580, So it looks to me my best option is not to register for VAt but then I have the problem of not having a VAT number.

Do you think this is right and if so anybody have any tips for me. Any help would be great, thanks for taking time to read this.

nompere

It's not only the stock on which you'll be paying VAT.

Many of your business expenses - accountants, lawyers, stationery, repairs, utilities, fixtures and fittings in your business premises - will be liable to VAT. And if you rent your business premises you will find that most landlords will need to charge VAT, and will want to let to a registered tenant.

Your other point is true - it's just simpler to be registered and to quote a number. VAT compliance isn't difficult.

EamonOSullivan

To really get to the bottom of this you will need to figure out how much VAT you will have to pay on light & heat, printing, legal fees, and so forth. Many landlords do not charge VAT on Rent, so I would not assume that you will have to pay VAT on Rent.

In general, if you can sell to consumers without charging VAT you are better off because you have to pay VAT on the difference between what you buy the goods for and what you sell them for. The consumer is not interested in whether you are registered for VAT as such, they just want to pay the smallest amount they can for the goods.

This all changes if you are selling to business i.e. to other entities that are registered for VAT.

stephencaso

Hey guys, thank for your replys and help.

I do understand about the other business expenses. I am just trying to keep the example simple.

Eamon good point about selling to business.

So from this i am gathering that if I am selling to the end user , not registering for VAt might be the best option ( if i can get the supplier to supply me without a VAT no)

And if i plan to sell to business I should register for VAT as that business will most likely be register for VAT itself.