Dropshipping USA to USA - VAT zero rated or VAT exempt?

Discussion in 'Accounts & Finance' started by Maroda901, Aug 1, 2020 at 10:09 AM.

  1. Maroda901

    Maroda901 UKBF Newcomer Free Member

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    I can see myself hitting the VAT threshold soon but need to double check exactly what classes towards it. I am an online retailer/artist located in the UK

    UK to UK sales - VAT is obviously counted
    UK to EU sales - VAT counted
    UK to USA sales - VAT zero rated - so turnover counts towards threshold
    USA TO USA sales - ???

    For these sales I use a third party USA fulfilment company who print my work on products and ship them to USA customers. So the sale is USA to USA. Would this be VAT zero rated (counts towards threshold) or VAT exempt (doesn't count towards threshold)?

    Any advice would be appreciated!
     
    Posted: Aug 1, 2020 at 10:09 AM By: Maroda901 Member since: Aug 1, 2020
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    16,240 3,436
    As USA to USA sales are not supplied in the UK I would think that it has nothing to do with UK VAT.
     
    Posted: Aug 1, 2020 at 12:26 PM By: Scalloway Member since: Jun 6, 2010
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  3. Maroda901

    Maroda901 UKBF Newcomer Free Member

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    That's what I am hoping! Just had doubts as why are UK to USA sales counted, albeit zero rated? Yes they're buying from the UK, but they're USA customers.

    USA to USA logically shouldn't count at all and be exempt, but because I'm self employed and in the UK I just had a worry it would as surely this an oversight? I could ship uk to USA but I dont as it makes more sense financially to ship locally within the USA. And if by doing that they also are completely excluded from the VAT threshold then it's a no brainer. Just hoping it doesn't come across as some dodgy vat avoidance or anything.
     
    Posted: Aug 1, 2020 at 12:35 PM By: Maroda901 Member since: Aug 1, 2020
    #3
  4. Scalloway

    Scalloway UKBF Legend Free Member

    16,240 3,436
    Have you sorted out your US tax obligations?
     
    Posted: Aug 1, 2020 at 5:00 PM By: Scalloway Member since: Jun 6, 2010
    #4
  5. Maroda901

    Maroda901 UKBF Newcomer Free Member

    3 0
    Yes - I sell on online retail websites where US state taxes are automatically collected on US sales and applied. And as I dont have a 'nexus' within the USA I believe that's all I need to do.
     
    Posted: Aug 2, 2020 at 8:54 AM By: Maroda901 Member since: Aug 1, 2020
    #5
  6. lesvatadvice

    lesvatadvice UKBF Regular Free Member

    778 121
    I agree with Scalloway. Where goods do not enter the UK (USA to USA) the supply is outside the scope of UK VAT, so does not count towards your registration threshold.
     
    Posted: Aug 3, 2020 at 8:47 AM By: lesvatadvice Member since: Jul 7, 2011
    #6