1.7.2021 - VAT solution for dropshipping

[Leon]

Hello,

I guess this upcoming topic might be interesting for some forum members (incl. me) and it wasn't discussed here till now.

From 1.7.2021 on the 22€ VAT exemption for imported goods to the EU will be removed and this will be a problem for many offshore DSer without EU VAT numbers (Hong Kong setup for example). Till now, there are some theories on how this will affect the business in practice, but no one has a solid solution.

Obviously, there is a simple solution to get an EU VAT number for example with the UK or Cypriot Limited, and charge the VAT as a non-offshore dropshipper would do. But this is not an acceptable solution for us, since it would reduce our profits significantly and the whole setup would become obsolete. (we are non-EU residents)

Anyone who is in this business and sells to EU countries will know what I mean.

Are there any ideas here in this group?

 

[JohnLocke]

Interesting question, have you already spoke to an CPA or other tax professional?

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[Leon]

Admin said:
Interesting question, have you already spoke to an CPA or other tax professional?
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Most of them unfortunately have no acceptable solution for our setup or are not sure about the final execution of the Regulation.

 

[Fred]

@Leon there is no solution so far.

We already received many requests about it and so far we could only give the advise to keep Dropshipping outside the EU as you still have most of the big markets outside the EU or you have to do the Dropshipping with local EU suppliers and forming yourself an EU entity.

However it's getting tighter each year so expect that you won't be able to do any business in EU with a Hong Kong company in the future. Adopt the EU rules to your business or avoid the EU.

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[uplana]

Leon said:
But this is not an acceptable solution for us, since it would reduce our profits significantly and the whole setup would become obsolete. (we are non-EU residents)
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I don't know how you can lose on this, you only have to charge VAT to persons not companies / businesses. You can simply apply the VAT rate when you sell to persons / individuals and take it of if they are a business ?

You can also go further, use a Cyprus company and just forget about to charge the VAT!

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[lory]

he never got back which means he may realized that his big issue indeed not was an issue 😀

 

[Fred]

lory said:
he never got back which means he may realized that his big issue indeed not was an issue 😀
Click to expand...

We noticed from several clients with Dropshipping Business Model that there is 0 enforcement right now of the customs in the EU - only Amazon an other big market places were introducing this immediately and a lot of accounts got blocked.

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