VAT rules for eCommerce businesses
The UK VAT rules for eCommerce businesses pose many questions. For example, when do I have to register for UK VAT?, when is UK VAT payable? and what amount is UK VAT payable on?
In this post, we'll summarise the UK VAT rules for eCommerce businesses selling goods as they stand at present.
The VAT place of supply rules for goods is instrumental in determining what country VAT is payable in, when you are selling goods as an eCommerce business. Put simply, they can be placed in the following categories:
UK eCommerce businesses selling goods in the UK at the time of sale
If your goods never leave the UK, then the place of supply is deemed to be the UK. You would therefore only be required to charge UK VAT either once registered voluntarily or when you have breached the mandatory VAT registration threshold.
When your goods leave the UK and you're responsible for delivering your goods to customers in the EU then the following applies:
Another key point to mention is that where goods are shipped from outside the UK/EU to a customer based in the UK, the sale is deemed to take place in the UK (refer to the place of supply rules above).
EU eCommerce businesses that sell goods to UK customers
The VAT rules for EU ecommerce businesses that sell goods to UK can be summarised as follows:
Non EU/UK eCommerce businesses that sell goods to UK customers
As far as non EU/UK eCommerce businesses are concerned, the position is as follows:
Non-UK/EU businesses should be mindful of the joint and several liability rules for online market places. We covered this topic in our previous post here.
Additional points and recent developments
A number of online platforms receive payments on behalf of the business and you'll need to take into account any charges, commissions etc when accounting for VAT. You can read more about this here
The EU are intending to introduce changes to the distance selling rules from 1 January 2021. This is the day after the proposed transitional period for Brexit ends.
Essentially distance sales which are normally treated as having a place of supply in the country of the customer, will be treated as having a place of supply in the country of the business. Though this is only where the supplies do not exceed a new €10,000 calendar year threshold
For more useful information, check out our Ebooks here.
And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].
Alternatively, please feel free to complete our Business Questionnaire here.