Registering vor VAT in other country

[UKSBD]

I have just read that if you supply a product or service to Ireland you are
obliged to register for Irish VAT.

Do all EU coumtries have this rule?

[Logistika]

Yes they do.
Vat is "THE" tax of the "Common Market" (thats what we originally called the EU / EEC).
The European Union was originally set up as an economic oriented body, and when we joined in the 70's, Vat was introduced to comply with narrowing the areas of economic difference.
It is the one tax where the authorities rely on exchanging information, using shared product codes for goods crossing borders, and now moving to include services provided cross border.
Different countries have different names for THE tax.
I have dealings in Italy, and there it is called IVA (known affectionately as Italian Vat, and more complex than UK Vat).
So basically yes, if you sell into any EU country, you may have to register there, depending on the types of supplies made and the level of turnover in that country.

Each country has different thresholds, different rates and different interpretations (not really in keeping with the concept of uniformity in the Treaty of Rome).

Instead of asking your accountant for advice, contact the Vat Helpline. Unless your accountants are on the ball they won't know the answer specific to your country. Neither will the Vat Helpline idiots.
However when you phone the Helpline, your call is logged so giving you protection in case you get penalised for not being compliant.

They don't give intelligent advice, merely read the pamphlets to you, but demand they arrange an appointment with your local Vat office European Compliance Officer, and present them with a written list of questions.

They are obliged to offer you an explanation (not advice!! - thats what accountants are supposed to do) on the current state of the laws pertaining to the VAT regime in other EC countries.

After all, it is the same people who penalise you for not complying there, and as a Vat registered trader, you are a client of HMRC and thus they owe you a duty of care in mitigating future penalties.

I once had a laugh at my accountants expense after he told me I had undercharged/underdeclared a lot of Vat, and he'd have to go sort it out for me, and negotiate penalties with the relevant country's authorites as I had charged Vat in one EU country, but not in another one on certain Training Videos's.

I simply gave him a letter from my local Vat office stating the supply was exempt in that particular jurisdiction. I didn't care if it was exempt or not, but if my Vat authorities said it was exempt, that covered me as long as I had correctly described the product.

[UKSBD]

Thanks,

This is frightenening, and appears to mean virtually every small business
who supplies a product to any EU company has to register for VAT in
the multiple countries they supply to.

I wonder just how many people here are registered for VAT in other EU
countries!

It makes a mockery of all the fuss about place of supply and reverse
charge etc.

Surely it restricts trade too?
There is no way I will accept an order from any other EU country

[Raw Rob]

This is frightenening, and appears to mean virtually every small business
who supplies a product to any EU company has to register for VAT in
the multiple countries they supply to.


No, you're missing an important point - there is a threshold of sales which you must reach before registering, which in most EU countries is relatively high, but is zero in Ireland.

Rob

[UKSBD]

Where do we find out all thresholds?
And unfortunately, Ireland is the country I am most interested in :(

[Raw Rob]

On this page is a link to a PDF which contains the thresholds:
http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/distance_selling/index_en.htm

The PDF is here: http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf

This says that the threshold for Ireland is €35000 (which is not what I previously thought). Need an accountant/VAT expert to clarify.

Rob

[UKSBD]

On this page is a link to a PDF which contains the thresholds:
http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/distance_selling/index_en.htm

The PDF is here: http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf

This says that the threshold for Ireland is €35000 (which is not what I previously thought). Need an accountant/VAT expert to clarify.

Rob


Thanks, yes I believe the €35000 is for residents and it is zero for non residents.
If it has that one wrong it's not really worth looking at.

[Raw Rob]

If it has that one wrong it's not really worth looking at.

But that's the official website of the European Union...

Rob

[UKSBD]

But that's the official website of the European Union...

Rob


Yes, you missed the last line though,

"This scheme is reserved for taxable persons established within the territory of the country."

Do you know if there is a table of thresholds when the taxable persons isn't established within the territory of the country

[Raw Rob]

Ok, found a document which states it a bit more clearly (although I still don't understand it): http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/dec2007/vat_ec_ei_en.pdf

4. WHAT ARE THE CIRCUMSTANCES GOVERNING THE NEED TO BE REGISTERED FOR
VAT?
For traders established in Ireland the position is as follows: - For supplies of services,
traders with a turnover of €27,500 p.a. or more must register. For supplies of goods,
traders with a turnover of €55,000 p.a. or more must register.
Traders established in other Member States engaged in distance selling must register for
VAT here if their sales to Irish customers exceed the threshold figure of €35,000.
Traders established in another Member State who are not established here and who make
supplies in Ireland in the course of furtherance of business must immediately register.
There is a zero threshold.
Traders whose business consists wholly of exempt supplies are exempt from registration.
Traders making only zero-rated supplies are not exempt from registration.
A trader making taxable supplies in the course or furtherance of business, whose turnover
is under the relevant threshold for registration, may elect to be registered. Once
registered, the trader takes on all the obligations of a taxable person.

[UKSBD]

Thanks, but I already know that about Ireland.

Trying to find a chart showing all the other EU countries.
Like I said earlier, probably not even worth the hasle of accepting an order :(

[3pic]

No one seems to have asked the OP this one yet. What are you selling (goods or services) and to whom (B2B or B2C).

If you supply goods to VAT registered Irish traders then you zero rate the supply. You can sell as much as you want, there is no threshold for these kind of sales.

If you supply goods to non-VAT registered traders or individuals then you charge UK VAT. Once you supply enough of these goods over a threshold of 35,000 euros then you have an obligation to register for VAT in Ireland. So you can sell upto the 35,000 euro limit and just charge UK VAT on those sales.

(see it this way, a UK firm selling exclusively in Ireland to Irish individuals, the UK VAT man gets the tax income, not the Irish VAT man. Hardly seems fair, hence why the distance selling thresholds exist. It also stops a customer in Ireland from buying outside of Ireland to buy goods at a cheaper VAT rate, as UK is 17.5% and ireland is 21% and again, is unfair to local irish traders who have to compete with cheaper UK traders).

If you supply services to VAT registered Irish traders then most services will also be zero rated and there is no threshold.

Certain services are excluded such as anything that involves a physical presence in Ireland (such as doing some building work for example or delivering a training session in Ireland). Such building/training services performed in Ireland would require Irish VAT registration as non-resident traders (ie, not based in Ireland) have a zero VAT registration threshold. This is a different threshold to the distance selling which is 35,000 euros - if you are building a property/delivering training you are doing it IN Ireland so you have to register. If you are just sending widgets over in the post, then the distance selling threshold is what matters most.

If you supply services to non-business entities (individuals) then mostly you would charge UK VAT, again up until the 35,000 euro threshold and then you need to register for VAT in Ireland.

Many companies which trade in multiple EU jurisdictions therefore have to have numerous VAT registration numbers in various EU member states. Companies like Next, Gap, Ikea will have VAT numbers in several countries, especially if they have an online/web retailing operation as well.

[yorkshirejames]

No one seems to have asked the OP this one yet. What are you selling (goods or services) and to whom (B2B or B2C).

If you supply goods to VAT registered Irish traders then you zero rate the supply. You can sell as much as you want, there is no threshold for these kind of sales.

If you supply goods to non-VAT registered traders or individuals then you charge UK VAT. Once you supply enough of these goods over a threshold of 35,000 euros then you have an obligation to register for VAT in Ireland. So you can sell upto the 35,000 euro limit and just charge UK VAT on those sales.

May I suggest that the OP ignores most of the gibberish on page 1, and just focuses on 3pic's excellent answer above.

[UKSBD]

There is no threshold for these kind of sales....


Sorry, but the wording is a bit confusing.
No threshold as in everything counts or no threshold as in nothing counts?

My reading of it is that there is no threshold so everything counts.
i.e. even if you just supply £100 of products to Ireland you have to
register for Irish VAT.

Is my reading of it the wrong way round, or is it correct that even if you
supply a single product you are obliged to register?

[3pic]

Sorry, but the wording is a bit confusing.
No threshold as in everything counts or no threshold as in nothing counts?

My reading of it is that there is no threshold so everything counts.
i.e. even if you just supply £100 of products to Ireland you have to
register for Irish VAT.

Is my reading of it the wrong way round, or is it correct that even if you
supply a single product you are obliged to register?

I see how that could be misunderstood. No threshold as in nothing counts.

For B2B sales to Ireland, where you have the Irish customers VAT number, you zero rate your supplies and there is no threshold.....you can sell as much as you like and never have to register in Ireland. If you don't have the Irish customers VAT number then any sales to that kind of customer means the distance selling threshold of 35,000 euros kicks in and you charge UK VAT to those kind of customers until you have to register in Ireland at the 35,000 euro mark.

For B2C sales to Ireland, you charge UK VAT upto 35,000 euros worth of sales and then the distance selling threshold kicks in (so the same as B2B sales to non-VAT registered customers). Its simple enough but you'll be invoicing in £ not Euros, so I've seen traders slip over the 35,000 euro threshold by mistake as 35,000 euros is not £35,000 sterling!

It is much the same for services, but if you can say whether your customer(s) are B2B or B2C and what your supplies are (Goods/Services) we can pin it down for you.

Feel free to PM me with if you wish or I can call you on your Warks number if you prefer?. Let us know.

[UKSBD]

I see how that could be misunderstood. No threshold as in nothing counts.

For B2B sales to Ireland, where you have the Irish customers VAT number, you zero rate your supplies and there is no threshold.....you can sell as much as you like and never have to register in Ireland.

The Irish VAT website appears to say the opposite

"Foreign firms who are not established in Ireland and who supply taxable goods or services here are generally obliged to register and account for Irish VAT. The turnover thresholds for VAT registration which apply to Irish suppliers do not apply and such suppliers must register regardless of the level of their turnover."

http://www.revenue.ie/en/tax/vat/international/faqs.html

Am I reading that wrong?

[3pic]

The Irish VAT website appears to say the opposite

"Foreign firms who are not established in Ireland and who supply taxable goods or services here are generally obliged to register and account for Irish VAT. The turnover thresholds for VAT registration which apply to Irish suppliers do not apply and such suppliers must register regardless of the level of their turnover."

http://www.revenue.ie/en/tax/vat/international/faqs.html

Am I reading that wrong?

You're not reading it wrong, but you are reading it in isolation. VAT consists of a whole range of differrent segments - if you look at one segment you get a taste, if you look at all the segments, you realise you're eating an orange.:D

The Place of Supply rules determine whether you make a supply in the UK or Ireland. The Irish website statement says "...who supply taxable goods or services HERE are generally". You aren't making any supplies THERE, physically in Ireland, you are based in the UK.

If you were building a house then you are making a supply in Ireland, if you perform training In Ireland you are making a supply in Ireland. If you are sending items from the UK to VAT registered Irish customers, the customers have to account for VAT, not you, under reverse charge.

You need to read Notice 741A on the HMRC website which details all these different segments, so that you can bear the fruit on this.

I could still do with knowing what you are selling (I'm assuming electrnoic services) and to whom (I'm assuming businesses, not individuals).

[UKSBD]

Thank you
I have read 741A (numerous times :redface:)

so basically "...who supply taxable goods or services HERE are generally".
means,

If your business is based outside IE and you supply a product you don't
have to register.

If your business is based outside IE but you are physically located in IE
when you supply the product then you do have to register.

The question was more hypothetical than anything else
In my case I supply internet advertising services (which isn't classed as
an electrical service) this comes under the B2B general rule for supplies
of services, so everything is irrelevant for that anyway.

But the main reason for the question is I also supply a product and had
an enquiry from Ireland for it (even more complicated is that it is a
product that can be zero rated sometimes).

It was when trying to find info about that when I saw the line
about having to register for Irish VAT
Amazing how one little word "Here" can make such a difference.

Thanks again.

[3pic]

I think you've got the idea UKSBD.

It can get quite confusing and the devil is in the detail and the interpretation of the published guidance. My advice on this thread is fairly generalist with lots of assumptions and so for a specific scenario it is best to double check that my comments remain valid.

If you have a physical 'product' to sell in Ireland, if it is B2C then you charge UK VAT upto 35,000 euros worth of sales and then after 35,000 euros worth you have to register for VAT in Ireland and stop charging UK VAT. So just ensure you sell less than 35,000 euros worth of the product in Ireland each year and you can just charge UK VAT.

If it is B2B you zero rate and let the Irish customer deal with it under reverse charge rules. So I think you've got it sussed now;).