Professor Professorson
Newbie
- Nov 24, 2018
- 5
- 0
Let's say I am dropshipping leather goods from Canada and want to start selling in the UK.
The UK has a standard VAT rate of 20%. If I register for VAT in the UK then whenever I sell a briefcase to a UK customer for $100, my UK customers will have to pay an extra $20 in VAT.
Belgium on the other hand has a reduced VAT rate of 6% for leather goods. Since the distance selling threshold from a non-EU country to the UK is £70,000 (=approx $90,000), if I registered in Belgium it seems like I could sell $90,000 worth of briefcases to the UK before I would have to register for UK VAT.
If I start paying VAT to Belgium instead of the the UK, it seems like I could save my first ~900 UK customers $20-$6 = $14 on every briefcase.
If this strategy works I would still have to start paying UK VAT eventually once my VAT threshold crosses $90,000. Another consideration is that if I later decide to sell something in the UK that isn't a leather good, I would have to pay Belgium's higher standard VAT rate of 21%.
Has anyone taken advantage of the varying reduced VAT rates and distance thresholds in different EU countries?
How would you go about finding a solid Canadian accountant that knows about EU VAT?
The UK has a standard VAT rate of 20%. If I register for VAT in the UK then whenever I sell a briefcase to a UK customer for $100, my UK customers will have to pay an extra $20 in VAT.
Belgium on the other hand has a reduced VAT rate of 6% for leather goods. Since the distance selling threshold from a non-EU country to the UK is £70,000 (=approx $90,000), if I registered in Belgium it seems like I could sell $90,000 worth of briefcases to the UK before I would have to register for UK VAT.
If I start paying VAT to Belgium instead of the the UK, it seems like I could save my first ~900 UK customers $20-$6 = $14 on every briefcase.
If this strategy works I would still have to start paying UK VAT eventually once my VAT threshold crosses $90,000. Another consideration is that if I later decide to sell something in the UK that isn't a leather good, I would have to pay Belgium's higher standard VAT rate of 21%.
Has anyone taken advantage of the varying reduced VAT rates and distance thresholds in different EU countries?
How would you go about finding a solid Canadian accountant that knows about EU VAT?