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Eu Dropshipping Vat Issues

Discussion in 'Money, Accounts & Finance' started by Digitaltom, Feb 8, 2017.

  1. Digitaltom

    Digitaltom

    Joined:
    Nov 4, 2010
    Messages:
    10
    Hi all,

    I've got some tricky dropshipping scenarios and both HMRC and google don't seem to provide any solid answers. I'd really appreciate any help on the subject as it seems to be a big grey area for dropshipping in the EU.

    If you have any information or thoughts please reply with sources to the appropriate legislation/statements. To help avoid misinterpretation in this post.

    The dropshipping situation:
    Customers visit my site and purchase a product at a Retail Price (RP), I then send their information to my Supplier who I pay a Wholesale Price (WP), the Supplier then sends the product directly to the Customer.

    Terms:
    End Consumer - An individual consumer, not VAT registered
    Supplier - 3rd party VAT registered business, in the EU
    Retailer - me, eCommerce site based in the UK

    Scenario 1:
    Retailer = UK | Consumer = EU Member State A | Supplier = EU Member State B
    Member State A and B are different. e.g. A = France, B = Spain

    Do I give my Supplier my UK VAT number to zero-rate the purchases at the WP?
    Do I charge the Customer UK VAT using distance selling regulations, up to the distance selling threshold for Member State A?

    Scenario 2:
    Retailer = UK | Consumer = EU Member State B | Supplier = EU Member State B
    Member States are the same, both are in State B = Spain.

    Does my supplier have to charge Member State B (Spanish) VAT on the wholesale purchase? Can this only be reclaimed if registered for VAT in Spain, and then claimed back through a Spanish tax return?
    Do I charge the Customer UK VAT using distance selling regulations, up to the distance selling threshold for Member State B?


    A few thoughts:
    Distance selling regulations - can this method be used if the goods never enter the UK?
    Triangulation - it seems like this method, except this only involves 3 businesses that are all VAT registered, not 2 businesses and an individual consumer.


    Thanks in advance for your help!
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