Online Trading And Value Added Tax

Sales of goods to customers in the UK

Subject UK domestic VAT, currently 20% (or possibly at the reduced 5% rate or zero-rate depending upon the nature of the goods) if registered or required to be registered for UK VAT. Remember in this instance sales to private customers within the EU count towards the UK VAT registration threshold. Also remember that once registered for UK VAT voluntarily or compulsorily, then UK VAT on business costs and on the purchase of the goods (if applicable) can be reclaimed subject to the normal rules governing the recovery of UK VAT.

Sales of goods to customers outside the EU

Zero-rated provided they go to the customer outside the EU within three months of the date of the sale and the seller has the correct evidence of the goods leaving the UK.

Sales of goods to private customers in the EU

Subject to UK VAT if registered for or required to be registered for UK VAT. There are no EC Sales Lists to be completed for these sales, but sales will require to be declared on UK VAT returns. However, each member state of the EU has a distance selling threshold and once the sales to any one member state exceed that threshold in a calendar year, the supplier needs to become registered for VAT (or the equivalent) there.

For example in France the threshold is currently 35,000 Euros and in Germany 100,000 Euros. Once registered within another Member State the sales and VAT would need to be declared and paid in that country. In the UK you would still need to declare the sales figures (but not UK VAT) on a UK VAT return. Also, subject to the values with other Member States, there may be a requirement to complete an EU Intrastat Declaration within the UK, and or within other EU Member States should a VAT registration be required within other Member States. .