Urgently need to know what is VAT and can I open VAT number for Offshore company?

[torsten]

Hi I need to know what is VAT and how I can open VAT number for Offshore company? I see that some book stores charge VAT when I checkout if I have VAT number I don't need to pay that which gives me an discount of between 15 and 25% !!!

 

[JohnLocke]

You will need to incorporate in an EU country in order to register for VAT! Cyprus is such an country, by incorporating a company in Cyprus you will have almost the same benefit as from a real offshore company registered in some sort of tax haven! Cyprus has the lowest tax within the European union and you can register the company for VAT!


For general information about your second question ie What is VAT please find a link here Value added tax - Wikipedia, the free encyclopedia

 

[EliasIT]

If you don't know what VAT is how do you want to run a business?

 

[torsten]

It may come to a suprise to you but Im stil learning so I can run a business just because I don't know what VAT exactly is!!

 

[undercover]

All companies need to be VAT registered or no?

 

[JohnLocke]

No not all companies need to be registered for VAT! Most offshore companies can't even be registered for VAT because they are located in offshore jurisdictions and not Europe.

 

[EliasIT]

If you're unsure about whether to register for VAT, this guide will help to answer many of your questions. It explains when you must register and also when you can register voluntarily, and why you might benefit from voluntary registration.


HM Revenue & Customs: When to register for UK VAT

 

[megamath]

May it help the noobs that don't know how a corporate business works

 

[torsten]

I thought this is a discussion forum to ask questions!!! sorry if that isn't the case :embarassed:

 

[Maydi]

Most of the world outside of Europe does not have VAT. Most businessmen in the North America, South America or Asia would have no idea what VAT is. Condescending comments just display your ignorance.


I have the same question, what do you *gain* by registering for VAT? In what ways does it save me money (versus cost me money)?

 

[alibran]

If you sell a product that's zero rated for VAT, or the vast majority of your sales are outside the EU (VAT is only charged on sales within the EU), you will probably benefit from registering.


For example, I ran a bookshop years ago. I registered for VAT even though my turnover was below the threshold because books were zero rated (not sure if they still are), so I didn't have to charge VAT, but I could claim it back.

 

[orangeye]

This is a great thread with lots of great information thus I still need to know why it is better to be registered for VAT with an onshore company (EU) rather than register an Offshore company that can't be registered for VAT?

 

[JohnLocke]

This is a great thread with lots of great information thus I still need to know why it is better to be registered for VAT with an onshore company (EU) rather than register an Offshore company that can't be registered for VAT?

Actually there is no one size fits all! It depends very much on your situation and what it is you want to achieve. For B2B business it most often can be not relevant but for B2C businesses it can be relevant..

 

[new-to-offshore]

Is the VAT you discuss here the same as value added tax ?

 

[OAEC]

VAT is a tax on goods and services that are shown on an invoice issued by an EU Company. Cyprus is the most well known offshore juristiction in Europe particularly as it has a tax rate of 10% if you are an onshore company and a vat rate of 15%

 

[new-to-offshore]

So is Cyprus the only country with a low VAT rate? I see many open a company in the Netherlands to enter the European market?

 

[OAEC]

Cyprus isn't the only country with a low VAT (value added tax) rate but it is certinaly one of the lowest at 15%. The Netherlands is 19% I believe. Cyprus is a much easier place to get set up than the Netherlands.


Registering for VAT can be beneficial, however this can only be done for a European Company - you cannot register for VAT with an offshore company (like Seychelles, BVI, Belize, Panama for example).


There was a reply below which gave the following link - HM Revenue & Customs: When to register for UK VAT.


Please note this is only for VAT registration in the UK, no where else in the EU. I can certainly assist in trying to advise whether you will need to register if you give more details.


VAT is a sales tax and is certainly not known throughout the business world, I am often faced with the question - what is VAT? from professionals all over the world so do not be made to feel like this is not a good question. Although to most people based inside EU we will be more than familiar with it (it is a tax we have been paying our whole lives!).


There are different requirements in each country in Europe when it comes to VAT registration. For example in the UK you can only register if you have a turnover of more then £70k and you are dealing with local clients based in the UK. You also have to have an address and local contact number now.


In Cyprus it is actually quite easy to register for VAT and you just need to supply a proforma invoice to a potential client to demonstrate you are trading and need the VAT number.


In some countries you need to have a physical office with staff (like Ireland).


The benefit of registering is that if you are charged VAT by any suppliers than you can claim it back (meaning before it was a cost you had to 'swallow'). If you are registered though you will need to charge VAT on your services (unless your product/serice is exempt like the fellow who was selling books).


Hope this is helpful!

 

[torsten]

Great to see some good answers to my questions, I figured out that we have to charge VAT to customer's that buy directly from our website / company in Cyprus. Actually CCLOGIC was very helpful to solve my issues