Would dropshipping count as UK sourced income?

[hdloader11]

I'm thinking of opening a UK LLP for my dropshipping business, selling solely to customers in UK. Situation is as follows:

1) I'm planning on getting a transferwise account + card, and receive GBP to that account.

2) I already have a supplier who has the products in their warehouse inside the UK. So there will be nothing that will go through customs. This supplier has already imported these products and paid VAT+Customs duties on each and every one.

UK LLPs are pass through entities, but there is a mention of UK sourced income being taxable. From my experience using USA LLCs, US sourced income is a very limited definition that doesn't include dropshipping, and doesn't apply to majority of businesses who have no significant presence in USA.

So my question is that would my profits from dropshipping to UK considered UK sourced income? Or would it be like in USA and not taxed.

 

[fshore]

Where are the partners located?

In any case you'd have to register for UK VAT‌ as you're shipping from within the UK, even if all sales are zero rated exports.‍

Btw, the supplier doesn't pay vat on import of those items (if they are vat⁠ registered).

 

[hdloader11]

Partners are located outside of EU. But it seems⁤ like I will still have to collect VAT. Makes more sense to get a US⁣ LLC instead then.

 

[startfleetio]

Dropshipping technically won't be UK-sourced income, but VAT is still required.

 

[fshore]

A US llc wouldn't change the vat situation, if your supplier is still‍ shipping orders on your behalf from the UK.

 

[zonez]

Yes it will, unless you reside outside the country.
The place where you do trade‌ is where you pay

 

[PaulKruger]

But if you ship from the UK and it is the US LLC that own‌ the products which is not located in the UK so you don't need to charge‍ VAT right ?

 

[fshore]

Ship from the UK when the product⁠ is not located in the UK, how is that possible?

If you ship from the⁤ UK then the product is in the UK and you have to charge vat to⁣ UK customers. Or zero rate exports.