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Register for VAT or not, need your advice

  • 20-04-2012 8:42pm
    #1
    Irishsunshine
    Closed Accounts Posts: 10 ✭


    Hi all,

    I want to register as a sole trader and open an online website to sell goods I'll import from China.

    I know my initial annual turnover is definitely under 75,000EUR, which means I don't need to register for VAT. I have read lots threads here. but still have a few questions in my case, I really appreciate that I will get some advices. Thank you in advance:

    1. As I know, if I don't register for VAT, I don't need to charge VAT for the goods that I sell to the Irish individuals online. I want to be sure if this is correct?

    2. If I sell the goods to UK customers, do I need to charge VAT, if I don't register for VAT?

    3. The benefits on not registering for VAT, in my understanding, is I can set a cheaper price on the goods, because I don't need to charge VAT. But the downside is I can't claim the VAT on the goods imported from China.

    so I'm still struggling on registering VAT or not. I have a calculation here, I'm not sure if it is correct:

    If I import €100 goods from China, I need to pay the VAT 21.5%(may be more now) which is €21.5.

    - scenario1: If I register for VAT, I claim VAT back, and get €21.5 back, and I sell the goods online at€200 plus VAT(200*21.5%) = €243. so my profit is 200-100=100.

    -scenario2: If I don't register for VAT, I sell at €200, so my profit is 200-100-21.5=88.5. BUT if I sell at 221.5 instead of 200, my profit changes to 221.5-100-21.5=100 which is as same as scenario2.

    In conclusion, to make the same profit €100, if I register for VAT, the price shown to customer is €243; if I don't register for VAT, the price shown to customer is €221.5 It means it's better not register for VAT, because customer prefer €221.5 to €243, if my calculation is correct??

    However, I still have another concern that if one day, my annual turnover make more than €75,000, I must register for VAT, at that time, If I still sell the goods at €221.5, my profit will be cut down. And it's not a wise idea to increase the price. That is the reason that I can't make a decision. Can any one wit experiences give me some suggestions?:confused::confused::confused:

    thank you.


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