taxes, ltd, tax-structure, europe, vatWhat if company from (example) Ireland resell products from UK dropship company to UK buyers? Company from country “A” make dropship (resell) products from country “B” to country “B” (to end consumer).
In this case Ireland company dont posses or ship item and dont have any connection with dropshipping comapany in UK (except that have online access into their warehouse and wholesale price).
Is this distance selling?
Where Ireland company must pay tax if turnover is under thresholds?
In this instance the answer really depends on whether the Irish and UK companies are VAT registered, and also whether the customer for the goods is VAT registered (typically the case with commercial customers) or retail customer.
The fact that the goods havent physically traveled from the UK to Ireland and back to the UK again is of little practical importance. Assuming both the Irish and UK companies are VAT registered then reverse charge VAT rules generally apply, this essentially means that both companies account for the VAT on both the purchase and sale of the goods in their home country in the form of input and output credits. The end result being that it looks from the outside that they transact VAT free.
As far as selling to the end customer, if they are VAT registered the same rules apply, if they are not VAT registered then VAT must be charged - unless the selling company is not VAT registered.
First off, it is distance selling.
Secondly, and as already highlighted by Finbarr, whether VAT should get charged at all depends on whether the seller and the customer are VAT registered.
Thirdly, it also depends on the nature of the goods:
Related reading with references:
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