Distance Selling VAT

Taiwanmonkey

Hi guys - long time reader, first time poster. Looking for some help with tricky European VAT.

I am resident in Ireland and currently get my income from freelance work I do and some rental income. I am not registered for VAT in Ireland.

I want to set up a small new business (by myself) selling books online to customers. I have found a great fulfillment centre in Germany that really suits my needs. Apparently, under the Distance Selling VAT rules, I will need to set up a VAT ID in Germany.

"If you use a fulfilment centre in Germany to house your stock to supply your private customers, this triggers an immediate need to VAT register in Germany – there is no threshold to exceed. Once registered you will be obligated to file the periodic VAT returns."

I presume this means I sell the books with the German VAT rate. But my real question is, does this make me VAT registered in Ireland too? Would it have any implications for my current Irish income? I'm nervous about potentially messing up the system I have here in Ireland already by adding VAT to the mix.

Thanks in advance

Da11

Taiwanmonkey wrote: »

Hi guys - long time reader, first time poster. Looking for some help with tricky European VAT.

I am resident in Ireland and currently get my income from freelance work I do and some rental income. I am not registered for VAT in Ireland.

I want to set up a small new business (by myself) selling books online to customers. I have found a great fulfillment centre in Germany that really suits my needs. Apparently, under the Distance Selling VAT rules, I will need to set up a VAT ID in Germany.

"If you use a fulfilment centre in Germany to house your stock to supply your private customers, this triggers an immediate need to VAT register in Germany – there is no threshold to exceed. Once registered you will be obligated to file the periodic VAT returns."

I presume this means I sell the books with the German VAT rate. But my real question is, does this make me VAT registered in Ireland too? Would it have any implications for my current Irish income? I'm nervous about potentially messing up the system I have here in Ireland already by adding VAT to the mix.

Thanks in advance

You will not automatically become a VAT registered here in Ireland and your VAT registration will only apply to your vatable activity in Germany.

Taiwanmonkey

That's really interesting - so I'd sell the books with German VAT, and I'd be able to get VAT back on purchases related to the business too? I presume I'd have to fill in an annual VAT return form in Germany, but the income part would just be processed with the rest of my Irish income by Rev

Rulmeq

Most books have 0% VAT in Ireland: https://www.revenue.ie/en/vat/vat-on-goods/printed-matter-and-photography/index.aspx

So unless you're selling workbooks, or diaries or something, you're going to be 19% more expensive here than you need to be (assuming Germany charges 19% VAT on books, and I'm too lazy to google it).

Taiwanmonkey

Yes, I know, but the fulfillment centre I want to use offers a really cheap way to access the worldwide market with the books, and books are only 7% there.

What about claiming back VAT refunds? I presume I am treated like a german business in this sense: meaning I can claim back vat on all purchases from Germany, and also on intra-community purchases from other VAT registered businesses with the Reverse Charge? It's a bit scary registering for VAT in another country!

Rulmeq

Taiwanmonkey wrote: »

What about claiming back VAT refunds? I presume I am treated like a german business in this sense: meaning I can claim back vat on all purchases from Germany, and also on intra-community purchases from other VAT registered businesses with the Reverse Charge? It's a bit scary registering for VAT in another country!

I would have thought the same (intra-eu etc), but if you have to register in Germany then that kind of throws a cat amongst the pigeons. You probably need to talk to your accountant (or find one that specialises in VAT)