I run an Amazon business, approaching VAT threshold, but confused. Advice appreciated

Lord TSC

Right, so here's the deal. Last year, I started up a very, very small Amazon business.

With €500, I started buying goods which get delivered to my house (usually from Italy, Netherlands and Poland), repackaged and prepared as necessary, shipped them over to the Amazon warehouses in England and used the Fulfilled by Amazon program to sell goods online. 95% of my sales are UK customers who buy from Amazon.co.uk, the items are shipped out of the warehouses by Amazon, who then take their cut of the money at source (fees and shipping costs), and pay me every two weeks whats left.

In the last 12 months, I have done approx €33,000 worth of sales, with about 95% of that being to UK based customers. The other 5% would amount to about €3k, spread between Amazons in Germany, Italy, Spain, France, and a little on Ebay as well.

Back in October, I went to two accountants cause it was tax season. Both said I was under the threshold for VAT (at the time) by enough of a margin that I didn't need to worry about it. In neither discussions was the term "distance sales" brought up, and in one, I was told the threshold was past €70k-ish. I asked the revenue, and they weren't much help either; I got a response in broken English saying both that I'd need to register in Ireland at €35k, but also in England once I broke their threshold for distance sales (€114k).

My issue is this, then. The threshold for distance sales, as I read it, is €35k in Ireland, so I'll need to be registering pretty soon. But both accountants gave different answers as to what I should be doing. I think.

As an Irish based company, do I register for VAT in Ireland? (as one said)
Or, since goods are stored, sold and transported within in the UK by UK-based consumers, do I register for VAT in England? (as the other said).

Or...this morning, I get the vibe that I am meant to register in Ireland at €35k, continue to do business up to €114k, and then register and switch over to paying the UK the VAT? Presumably at that stage, the Irish revenue lay off me and don't expect extra VAT, on anything other than goods sold in Ireland? Is this correct?

On a related note, and probably a more straightforward question...once I register for VAT, I can obviously claim VAT back on any VAT I pay to wholesalers and such. But that doesn't work retroactively, no? Because of the competition on Amazon, I won't just be able to jack up my prices by 22%, so I presume I'll just have to be taking the hit on goods I already have and accept they are worth 22% less now, in the grander scheme of things?

Thanks in advance guys and gals

matt-dublin

You pay the vat in the country of sale I think which is the UK in this instance.

You would only be liable for income taxes here.

gerrybbadd

VAT is not a cost to a VAT registered trader.

Strictly speaking, VAT should be built in to your asking price for your product. So in order words, its the consumner that pays the VAT, just to you instead of direct on to Revenue. You then remit the VAT over in your bi monthly returns.

If you are suffering VAT on your purchases, you can claim a deduction on these amounts.

Lockedout2

I think you have to get some of the terms correct.

1. The VAT registration threshold for goods is €75,000 in Ireland.

2. Distance selling is where goods are sold by a vendor in one state to an unregistered person in another state, so as you are not selling into Ireland you don't need to worry about the Irish threshold. You need to worry about the threshold in the other country.

http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html

Lord TSC

gerrybbadd wrote: »

VAT is not a cost to a VAT registered trader.

Strictly speaking, VAT should be built in to your asking price for your product. So in order words, its the consumner that pays the VAT, just to you instead of direct on to Revenue. You then remit the VAT over in your bi monthly returns.

If you are suffering VAT on your purchases, you can claim a deduction on these amounts.

Yeah, I get that in theory. In practice, I've been charging the max I could over the last 12 months. The competition on Amazon means that I can't just "pass it on to the customer", as it would usually be advised. The prices of the items will have to stay the same (otherwise, they won't even show up on Amazon as it stands, let alone sell). So what I'm stuck in is a position where I won't be able to increase the prices, but will have to start deducting the VAT from the current prices...if that makes sense.

I know it means everything I buy after I register won't be affected (since I can claim back VAT on anything I buy and charge VAT, so it balances itself out). But the stock I have at the moment probably devalues a bit because of the fact prices are, by and large, locked in

Lockedout2 wrote: »

I think you have to get some of the terms correct.

1. The VAT registration threshold for goods is €75,000 in Ireland.

2. Distance selling is where goods are sold by a vendor in one state to an unregistered person in another state, so as you are not selling into Ireland you don't need to worry about the Irish threshold. You need to worry about the threshold in the other country.

http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html

Right. I was just talking to revenue on the phone, and what they say is (as above...)
*Register and pay VAT in Ireland once I hit the €35,000 which is the threshold for distance salves in Ireland.
*Once I hit the threshold for whatever country I'm selling to, then register for them and switch who I'm paying VAT too.

It seems to be, for whatever reason, that because I am situated in Ireland, they want me paying VAT at €35k, but once I hit the UK threshold, then the UK will want to take over taking that money in.

...which kind of adds to my list of "Why I hate this country and its inability to help small businesses", cause it feels like they want a chunk of the cash before I start paying the UK, that they've set a drastically lower limit than the UK to ensure they get that cash, and making me jump through hopes registering twice.

But if thats what I have to do, thats what I have to do, I guess

nompere

Lord TSC wrote: »

Right. I was just talking to revenue on the phone, and what they say is (as above...)
*Register and pay VAT in Ireland once I hit the €35,000 which is the threshold for distance sales in Ireland.

It seems to be, for whatever reason, that because I am situated in Ireland, they want me paying VAT at €35k, but once I hit the UK threshold, then the UK will want to take over taking that money in.
/

Your sales in Ireland are nil so you don't register here. That's what they are actually saying.

Lockedout2

Don't think that Revenue are actually answering the question you asked them.

matt-dublin

Why would the revenue tell you to register for vat here?

Sine you're not actually selling anything here you shouldn't have to register for vat.

You do however have to register in the UK.

Any profits you make however are liable for income tax.

Lockedout2

matt-dublin wrote: »

You do however have to register in the UK.

.

Why would he have to register in the Uk if under their registration threshold?

matt-dublin

Lockedout2 wrote: »

Why would he have to register in the Uk if under their registration threshold?

When they hit the threshold I mean apologies.

Lord TSC

matt-dublin wrote: »

Why would the revenue tell you to register for vat here?

Sine you're not actually selling anything here you shouldn't have to register for vat.

You do however have to register in the UK.

Any profits you make however are liable for income tax.

Right, thats what I would think makes sense. That stuff sold in England warrants paying VAT to the UK, and stuff sold in Ireland warrants paying VAT to Ireland.

But then I read...

Distance sales from this State

An Irish supplier who makes distance sales to customers in other Member States who are not registered for VAT, is liable to Irish VAT on such sales until the value of the sales reaches the threshold applying in that other Member State. Once the value of the supplier’s sales exceeds the threshold in the other Member State, the supplier is obliged to register in that Member State and account for VAT at the rates applicable there. If the appropriate threshold is not exceeded, the supplier may, nevertheless, opt to account for VAT in the Member State to which the distance sales are made.

From: http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html#section7

...which seems to be what the woman at the revenue told me as well; that there seems to be a window between €35,000 (The Irish threshold for distance sales) and £70,000 (the threshold for UK Distance selling) where the Irish Revenue want me paying them VAT, despite the goods not being sold to UK based customers (Threshold figures taken from: http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf)

(I worry I'm coming across as unappreciative of replies here, and I don't meant to be. I genuinely am thankful for them. Just trying to wrap my head round things. I'll probably ring them back on Tuesday to get a final confirmation, but just want to arm myself with as much info as possible so I'm not paying more than I need too...)

EDIT: Another example from the Revenue site that says it a bit clearer...

Example

A VAT-registered Irish trader supplies goods by means of mail-order to a private individual in the UK. If the seller's level of trade to private individuals in the UK is below the Distance Sales threshold of €100,000 as applied in the UK and the trader has not elected to register for VAT in the UK, the place of supply is the State and, therefore, the trader has an obligation to account for Irish VAT on the goods.

Source: http://www.revenue.ie/en/tax/vat/guide/supply-of-goods.html

matt-dublin

Lord TSC wrote: »

Right, thats what I would think makes sense. That stuff sold in England warrants paying VAT to the UK, and stuff sold in Ireland warrants paying VAT to Ireland.

But then I read...

Distance sales from this State

An Irish supplier who makes distance sales to customers in other Member States who are not registered for VAT, is liable to Irish VAT on such sales until the value of the sales reaches the threshold applying in that other Member State. Once the value of the supplier’s sales exceeds the threshold in the other Member State, the supplier is obliged to register in that Member State and account for VAT at the rates applicable there. If the appropriate threshold is not exceeded, the supplier may, nevertheless, opt to account for VAT in the Member State to which the distance sales are made.

From: http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html#section7

...which seems to be what the woman at the revenue told me as well; that there seems to be a window between €35,000 (The Irish threshold for distance sales) and £70,000 (the threshold for UK Distance selling) where the Irish Revenue want me paying them VAT, despite the goods not being sold to UK based customers (Threshold figures taken from: http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf)

(I worry I'm coming across as unappreciative of replies here, and I don't meant to be. I genuinely am thankful for them. Just trying to wrap my head round things. I'll probably ring them back on Tuesday to get a final confirmation, but just want to arm myself with as much info as possible so I'm not paying more than I need too...)

EDIT: Another example from the Revenue site that says it a bit clearer...

Example

A VAT-registered Irish trader supplies goods by means of mail-order to a private individual in the UK. If the seller's level of trade to private individuals in the UK is below the Distance Sales threshold of €100,000 as applied in the UK and the trader has not elected to register for VAT in the UK, the place of supply is the State and, therefore, the trader has an obligation to account for Irish VAT on the goods.

Source: http://www.revenue.ie/en/tax/vat/guide/supply-of-goods.html

Basically the revenue are feckers and get u everywhere!

Lockedout2

OP have you an accountant?

International VAT is complicated at the best of times and you have the added complication of having zero Irish sales.

Distance selling rules are there to stop abuse of the system for example Luxembourg has a 17% standard rate we have a 23% standard rate, if you were selling in Ireland and some one could sell that product 6% cheaper you would be upset I'm sure.

So Ireland decided that to stop this the limit would be €35,000. The UK rate is 20% so they are not as concerned.

Now back to yourself. The question you have is when you have to register for VAT. I would think that the minimum level is €75,000.

Having said that you may exceed the €41,000 intra EU acquisitions registration threshold sooner.

Most of the references in the guidance are for VAT registered businesses.

Lord TSC

matt-dublin wrote: »

Basically the revenue are feckers and get u everywhere!

Yeap :pac:

Lockedout2 wrote: »

OP have you an accountant?

International VAT is complicated at the best of times and you have the added complication of having zero Irish sales.

Distance selling rules are there to stop abuse of the system for example Luxembourg has a 17% standard rate we have a 23% standard rate, if you were selling in Ireland and some one could sell that product 6% cheaper you would be upset I'm sure.

So Ireland decided that to stop this the limit would be €35,000. The UK rate is 20% so they are not as concerned.

Now back to yourself. The question you have is when you have to register for VAT. I would think that the minimum level is €75,000.

Having said that you may exceed the €41,000 intra EU acquisitions registration threshold sooner.

Most of the references in the guidance are for VAT registered businesses.

Haven't got a proper accountant, so to speak; I've spoken to two pre-Xmas, but neither seemed all that interested in much discussions. In fairness, I was half the size at the time, and haven't made much money out of it yet (thanks to the fact I'm on BTWEA, I've not turned a profit yet; every penny I get goes back into stock, while the weekly payments from the scheme keep me going). One outright said I was playing with a hobby so didn't need an accountant yet. I'll be approaching them and seeing if they take me more seriously over the next few weeks.

I've gotten most of the form filled out now anyway; registering for VAT is something I was going to have to do sooner or later anyway. Its a fun complaint to have, I guess. That things are expanding that quickly that I have to deal with the red tape of it all

Thanks for the help everyone