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Posted Sun, 02 Oct 2022 16:30:53 GMT by spenniespen
Hi, I hoping someone can help. There's a lot of info out there for VAT registered businesses, but almost none for businesses like me who are NON Vat registered. I'm a NON VAT registered (no where near the £85K threshold) artist and a Sole Trader. I have an e-commerce website and am set up to sell B2C, to the EU and further afield. From what I understand, as long as I use DAP (delivered at place) Incoterms and the buyer is the importer of the record and pays the import VAT, which they would under these incoterms, then I do not need to register for VAT in the UK nor in any countries which I sell to. My first question is, do the same above rules apply when I sell/export to B2B? For example. I'm in talks with an EU art gallery who are VAT Registered and would like to sell some of my artworks in their gallery. We are discussing two possible ways of doing this... 1. They buy artworks from me at a discounted price and sell them in their gallery. So they pay me for the artworks, I send them by post, they pay the import VAT (DAP incoterms). They sell them in their gallery for more than they paid me, plus VAT. If I used this process, do I need to give the value of the goods (for customs purposes) at the discounted price I sold them to the gallery or the price without discount? 2. On a sale and return basis. I send them the artworks, which remain my property until sold. When an artwork is sold, the gallery takes payment on my behalf, and asks me for an invoice in the name of the customer. The gallery takes X amount of commission +VAT and pays me the remainder. For this scenario, would the Gallery be required to pay import VAT when I posted them the artworks? And if they returned an artwork, would I be required to pay Import VAT? Are the above sales processes feasible/compliant for me as a NON Vat registered business? Thanks in advance.
Posted Tue, 04 Oct 2022 11:57:47 GMT by HMRC Admin 2
Hi,

If you are selling goods B to C goods overseas then these would be exports. If you send the goods to a non EU country then any import duties should be picked up by the importer overseas and so there would be no requirement to register for VAT in the UK and no futher action would be needed by you in the overseas country,

If you sell goods B to C to the EU and the goods are over £135 then you have a choice as either being the importer of record in that country or letting the consumer be the importer of record. If you choose to be the importer of record then you would pay the EU VAT and you would have to register for VAT in that EU country and account for the VAT on the sale to the consumer in the EU.

If you choose not to be the importer of record in the EU then the importer in the EU will have to pay any import VAT and there will be no requirement for you to register for VAT either in the UK or the EU.

If you sell goods to the EU below £135 then you can either register for IOSS in the EU and pay the VAT on one IOSS return for all the countries you import to within the EU or you can let the importer pay the import VAT in the EU.If this is the case then again there would be no requirement for you to register for VAT in either the UK or the EU.

If you sell to a business in the EU then the IOSS system doesn't come in to it so again you have the choice of either letting the business importer being the importer of record or your vusiness being the importer of record.

Again if you are the importer of record you would pay any import VAT and you would need to register for VAT in that EU country but if you ket the business importer be the importer of record then there would be no requirement for you to register either in the UK or in that EU country.

EU VAT e-commerce package

Please contact our imports and exports team regarding your questions about the value of the goods you disclose on the exports and the return of the goods to the UK where there are special import procedures.

Imports and exports: general enquiries

Regarding your question as to whether the gallery would be required to pay the import VAT in the EU would depend again on who is the importer of record in the EU country. There will be special import procedures in that country which would likely allow them to defer any import VAT until the time that the goods are actually sold but the gallery in the EU would need to look in to this.

Thank you.
Posted Tue, 04 Oct 2022 14:12:24 GMT by spenniespen
Thank you for your speedy response and clarification! Forgot to ask, do I need to register for UK or EU VAT if I use DDP incoterms from UK to EU and other countries, b2c and b2b? From what I understand, using DDP would make me the importer of the record, but the shipping company would take care of the import VAT and so I wouldn't need to register?
Posted Wed, 05 Oct 2022 08:01:13 GMT by HMRC Admin 17
 
Hi.

You only need to register for VAT in the UK if you breach the current VAT Registration threshold.

I don't know enough about incoterms to tell you the consequences of using DDP.

You may want to speak with the Customs Lime about this as well.

You are correct in stating that if you are the importer of record for B to B or B to C sales then there would be a requirement to
register in the country where the goods are imported in to.

However I would confirm with customs as to whether DDP dictates who the importer of record is.

Thank you.

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