Buying goods within EU but exporting outside EU (Non VAT registered)

bmstuff

Hello,

Quick one.

I buy goods from EU suppliers and I am not VAT registered (Not reaching the threshold).
Now those EU suppliers are then charging VAT to me since I am not VAT registered.

Now most of those goods I ship them to the US, DUBAI etc. and no VAT is charged obviously.

Do I still need to pay VAT from my suppliers, or is there some provision in that case where if the goods are exported outside the EU, then I do not have to pay VAT from the suppliers?

Cheers

RUDOLF289

bmstuff wrote: »

Hello,

Quick one.

I buy goods from EU suppliers and I am not VAT registered (Not reaching the threshold).
Now those EU suppliers are then charging VAT to me since I am not VAT registered.

Now most of those goods I ship them to the US, DUBAI etc. and no VAT is charged obviously.

Do I still need to pay VAT from my suppliers, or is there some provision in that case where if the goods are exported outside the EU, then I do not have to pay VAT from the suppliers?

Cheers

Good morning bmstuff,

In principle all exports to countries outside the EU are zero rated from a VAT point of view.

However, if the goods are delivered to you, than - because you are not registered for VAT - your suppliers are obliged to charge VAT as applies in their jurisdiction.

There are two ways to resolve this ;

1. Export direct from your suppliers to your clients outside the EU. That way they have the proof neccessary to be able to apply a zero rate of VAT.
2. Register for VAT, even if you don't meet the threshhold (you can register for VAT even if you do not exceed the threshhold).

Obviously, if you go for option 1, you need to put a number of safeguards in place. It would be vitally important that for instance no invoice goes forward with the shipment to your clients. Also, you are exposing your clients details to your suppliers (or v.v.) which could be a threat to your business.

There are solutions to protect your interests. Feel free to drop me a PM and we can go through the options.

Cheers,
Rudolf289

professore

The advice above is surely not right ... If his clients are non EU they have no obligation to charge VAT? He still has to pay it though if he's not VAT registered.

He should register for VAT IMO.

RUDOLF289

professore wrote: »

The advice above is surely not right ... If his clients are non EU they have no obligation to charge VAT? He still has to pay it though if he's not VAT registered.

He should register for VAT IMO.

Hello Professore,

It really depends on where the goods are delivered to by his suppliers.

If they are delivered to bmstuff in Ireland, his suppliers are obliged to charge VAT on the purchase by bmstuff.

However, if bmstuff instructs the suppliers to send the goods to his clients outside the EU, they can legitimately apply the zero rate of VAT and will have the required proof to deal with any queries from their local VAT authorities (they would have the export SAD and shipping docs, which would be sufficient).

If that is not an option, then indeed it would make sense to register for VAT (as I suggested) even if he doesn't exceed the threshhold.

Once he is registered for VAT, his EU suppliers can apply the zero rate of VAT and bmstuff then accounts for the INTRA EU acquisition in his periodic VAT return.

Hope that clarifies the issue

Cheers,
Rudolf289

edward2222

If you sell, supply or transfer goods out of the UK to someone in another country
you may need to charge VAT on them. Generally speaking, you can zero-rate supplies
exported outside the European Union (EU), or sent to someone who’s registered for VAT in another EU country.

If you sell goods or services to someone in another EU country, who isn’t VAT registered,
you charge VAT in the normal way. Sales to another country inside the EU are called ‘dispatches’ or
‘removals’. ‘Exports’ describes sales to a country outside the EU.