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Wholesale: Do you pay UK VAT if purchased abroad and company based abroad?

Discussion in 'Online Marketplaces - eBay, Amazon, Etsy and more' started by clothesfashion1, Apr 28, 2020.

  1. clothesfashion1

    clothesfashion1

    Joined:
    Dec 3, 2018
    Messages:
    3
    Hi there I have come onto here to seek advice on the legality of setting up a wholesale business abroad in Cyprus simply for a fairer corporate tax rate. As far as I'm aware UK and Cyprus have a double tax treaty agreement so I assume tax isn't doubled.

    I plan to set up shop in Cyprus and import from china. I will pay all my VAT etc here in the UK for my imported goods however if I am selling online on a .com website based in uk and sell on UK eBay is it legal to pay tax only in Cyprus?

    I was going to speak to my accountant about this but proves difficult at this time.
  2. clothesfashion1

    clothesfashion1

    Joined:
    Dec 3, 2018
    Messages:
    3
    Is this the appropriate place to post?
  3. Jed

    Jed

    Joined:
    Feb 16, 2009
    Messages:
    8,873
    You will need to pay VAT on sales within the UK at the UK VAT rate for the item, however your company profits will remain within the Cyprus company, so you would only pay corp tax at the Cypriot rate to the Cyprus government (whatever that may be).

    The difficulty with this type of setup is when it comes to repatriating business funds, as you need to be very careful you pay any relevant taxes at this point. The cheapest way is usually via a dividend payment to yourself.
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