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Drop shipping in EU

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Ivkide

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Mar 29, 2019
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#1
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Hello!
Let`s call it drop shipping. If I sell my own goods to EU and outside EU from the 3rd country, operating by EU company. How it will be with VAT? I sell goods and pay VAT, but in case i send it outside of EU the customer also may pay additional fees?
 
#2
It depends where you ship from. If you ship from outside the EU then you don’t have to think about vat, as it’s the customer that will import your product into his country. If you ship from inside the eu then you need to vat register in the country you ship from, and possible in customers countries if you pass the distance thresholds.
If you ship from eu to outside the eu then it is zero rated. You still need to be vat registered though.
 
#3
VAT is not a fee! So if you do B2C within the EU you will have to charge VAT if you do B2C outside of the EU you will not have to charge VAT.
 
#6
Also if I operating under EU company and all payments go to EU bank account? I mean how to do bookkeeping? How to prove that i ship goods from outside of EU? Or for example not import them illegally?
 
#7
Ivkide said:
Also if I operating under EU company and all payments go to EU bank account? I mean how to do bookkeeping? How to prove that i ship goods from outside of EU? Or for example not import them illegally?
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VAT for physical products is determined by where the products are shipped from, not where the company is registered or payment is received.

You should keep shipping receipt as proof for where you ship from. Or a contract with your drop shipper.

I don't know where your company is based, but some countries might require you to vat register even if all the sales are outside vat.
 
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#8
Hey fshore I'm also doing the same scheme and would like to start a company in UK for this. So far, as for written evidence I've found the following on VAT guide (VAT Notice 700):

Supplies are outside the scope of UK VAT if any of the following apply:
  • made by someone who is not a taxable person
  • made outside the UK and the Isle of Man (see paragraph 4.8.3 for special place of supply rules for certain international services)
  • not made in the course or furtherance of business

And also:

4.8 Place of supply

To be within the UK VAT system a supply must be made in the UK. Supplies made outside the UK are outside the scope of UK VAT.

If your supply involves the importation of goods from outside the EU by your customer, then your supply takes place outside the UK

However, I am not sure if this is crystal clear and I can't find this information on the European Commission website. I also got in touch with HMRC through live chat support, and they told me that if the customer is outside of UK but within EU, no VAT should be applied, but if the customer is in the UK, then I should charge VAT which doesn't seem right.

How can I have my a*s covered with a company established in UK for drop-shipping purposes within EU?
 
#9
varden said:
If your supply involves the importation of goods from outside the EU by your customer, then your supply takes place outside the UK
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Would be hard to get it much clearer than this.

But, the vat rules in EU and also UK is supposed to change in 2021, similar to how sales moss vat is now.
 
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#11
varden said:
My goal is to enjoy while it last for this year. I guess there shouldn't be a problem with the VAT returns this year correct?
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You don't file vat returns if you are not registered for vat.
 
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