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TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience:  Chartered Accountant >20 years + Qualified IFA
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I had a question about e-commerce tax, I am located in Dubai

Customer Question

Hello,
I had a question about e-commerce tax, I am located in Dubai wanting to start an e-commerce cosmetic store online.
The warehouses I m using will be located in the USA and the products i'm going to buy at wholesale and sell are located in the USA, the other warehouse will be located in the Uk shipping to the EU, and all products are bought for whole sale from the EU. Where if anywhere do I need to pay taxes? I heard that in the UK i won t need to pay taxes unless I profit 70,000 pounds or more!! However, I'm not importing anything from outside the region, do I still need to pay tax?
Thank You!
Submitted: 1 year ago.
Category: UK Tax
Expert:  TaxVince replied 1 year ago.

Thank you for the question.

Expert:  TaxVince replied 1 year ago.

The £70,000 relates to distance selling. If you distance sell into the UK have to register for UK VAT if the value of your distance sales exceeds £70,000 in a year. If you’re outside the EU any sales you make to the UK aren’t distance sales and hence the £70,000 doesn't apply here.

Expert:  TaxVince replied 1 year ago.

In your case your customers may have to pay UK import VAT on the goods when they arrive in the UK. They may also have to pay duty.

Expert:  TaxVince replied 1 year ago.

The same applies to your sales across EU though each country may have different VAT rules.

Expert:  TaxVince replied 1 year ago.

Just to add the following:

I guess your case is like most online sellers (from China, India, US) who sell across EU from Amazon or eBay with no place of business in the UK and you are not required to register for VAT or any other taxes in the UK. However the warehouse arrangement needs to be checked that its VAT/ any other tax proof. The basic idea is that the delivery terms should be such that the customer is the importer of record, in which case VAT registration would not be required in the UK.

My only advice is that before you engage in this activity, get a tax expert to write up some advise on how to set up the structure and to review each country VAT rules where you have substantial sales and file the advice for future reference.

Hope this helps.

Regards

Customer: replied 1 year ago.
Thank you for explaining it in such a clear way. What if the products I am selling are purchased from wholesalers located in the UK, and I just sell in the UK, does VAT still apply for those sales?
Expert:  TaxVince replied 1 year ago.

Thanks for the reply. In that case you are trading in UK as you are getting supplies of goods from UK and selling in UK. Your suppliers will most likely charge you VAT for your wholesale purchases.

However regarding your sales, the VAT threshold for UK business for 2015-16 tax year it is set at £82,000. Hence you dont have to register for VAT if your sales are below this figure if you have a UK registered business. If you still operate from overseas office, you may also be caught by the Finance Act 2012 as explained HERE, hence required to register for VAT.

In any case you will find that its advantageous to register for VAT as you will recover the VAT charges you will incur from your suppliers (if your suppliers are UK based).

Expert:  TaxVince replied 1 year ago.

The link above doesnt seem to work but i have pasted it here: http://www.buzzacott.co.uk/news/non-uk-businesses-required-to-register-for-vat