Uk company and dropshipping - 1m yearly

[uranio]

Hello Guys.
So this's the point.
I make dropshipping on ebay in Italy,France, shipping the goods from these countries directly (not china anyway i could implement in future).
I'm Italy resident but uk too (i worked in uk years ago and i have still 3 bank accounts + proof of address).

I opened a uk company until my uk residence.
Now this's the point:
uk company + uk director and address= company tax and vat

uk company + outside director + outside address = no company tax and no vat.

How can i set up everything for not paying the vat?
can i change my address to my italian address and just not pay any vat and company tax? will i need to pay in Italy or can i just not pay anything anywhere as my company is in uk? (money will be keeped in company bank, i use revolut and transferwise).
Do i need to set another company for doing this?

I'm trying to figure out the best solution for me. I must need paypal (i use my own paypals in italy but i withdraw to company revolut and company transferwise).

What would be the best set up? i can open new company if needed, but i always need to withdraw from paypal.

How the people avoid tax in uk when trade outside uk? just leave the money in the bank and file the tax returns reporting 0?

Any advice is welcome, thank you

 

[uranio]

no answers? the must 95$ wasted in my life...

 

[onemansomewhere]

Hello,

There are many not understanding in what you wrote..

VAT is not connected with who it owns or where is that person resident. VAT is connected to where are your customers..
If your customers are in Europe, it does mot matter where you incorporate..

Every one company which buys goods in EU is responsible to register for VAT. Every one company selling a goods produced in EU, just within EU, is responsible to register for VAT. If you will have a company outside of EU, the only way how not to be responsible for VAT is to send goods from outside of EU to EU customers. Problem is, that your customers will be responcible to pay VAT in process of customs declaration.

So there is not way how to go around VAT..

When we talk about corporate tax, it can be optimized in some cases. But not easy when you have official residency in a high tax jurisdiction,. There will be needed more complex structure and need to transfer your residency to a low tax country or to a country with a territorial taxation system.

 

[uranio]

onemansomewhere said:
Hello,

There are many not understanding in what you wrote..

VAT is not connected with who it owns or where is that person resident. VAT is connected to where are your customers..
If your customers are in Europe, it does mot matter where you incorporate..

Every one company which buys goods in EU is responsible to register for VAT. Every one company selling a goods produced in EU, just within EU, is responsible to register for VAT. If you will have a company outside of EU, the only way how not to be responsible for VAT is to send goods from outside of EU to EU customers. Problem is, that your customers will be responcible to pay VAT in process of customs declaration.

So there is not way how to go around VAT..

When we talk about corporate tax, it can be optimized in some cases. But not easy when you have official residency in a high tax jurisdiction,. There will be needed more complex structure and need to transfer your residency to a low tax country or to a country with a territorial taxation system.
Click to expand...

Hello, thank you for your reply.
I understand what you said here, but i explain you better my business model.
I Sell for example on ebay and i buy from amazon,costway, or other retails that are inside th country where i sell (for example i buy in Italy and sell to Italian costumer).
So, as my margin is less than 20% so if i buy a good for 80,00€ i'll sell for 100,00€ my margin would be 20,00 and something less for expenses. How is going to be the var like this? as the vat is 22,00% in what i sell so more than my margin. How could be work? i think should be a structure or a way (legit anyway) for having this gone.
I need to figure out this.

Plus:
i'm thinking to open with other names (darks) ltd companies and emi's for and not paying any taxes there. Would be a good option i think. But if i would for example stay for half business in legal way under my name i need to figure out how work with this vat.
Any advice would be good, thank you.

 

[onemansomewhere]

I understand you buy from Amazon. But question is: From there is all that sfuff comming from? It is different to buy from Amazon - physicaly from EU and different to buy from Amazon - physicaly from outside of EU.

If you have italian company, which is a VAT payer and received invoices from Amazon.it, for 80 Eur, it is 65.57 + 14.43 VAT. When you sell for 100, you issue invoice 81.97 + 18.03 VAT.

You deduct from 18.03 VAT 14.43 VAT paid. So you pay VAT to Italian tax authority 3.60 Eur only. So your real profit in transaction is 16.40 Eur.

If you are buying from Amazon, but from outside of EU, this numbers are the same. Just difference is that Amazon bills you 65.57 only and you pay 14.43 to Italin customs and 3.60 to Italina tax Authority.

If you are buying from other EU company, outside of Italy, it does not make any sens to buy for 80 and sell for 100, when you have to pay a VAT.

Generaly, there is absolutely NO WAY how to go around VAT in Europe.

Using a darks to open UK company and Emi account is a straight one way ticket to the prison.
Although a UK company has to bill a VAT. Using a UK company is no way.

You have to start selling for higher prices. No other way. And you need a company in a low tax juriscidtion in the EU. For this type of business, is the best Kft in Hungary.

 

[uranio]

onemansomewhere said:
I understand you buy from Amazon. But question is: From there is all that sfuff comming from? It is different to buy from Amazon - physicaly from EU and different to buy from Amazon - physicaly from outside of EU.

If you have italian company, which is a VAT payer and received invoices from Amazon.it, for 80 Eur, it is 65.57 + 14.43 VAT. When you sell for 100, you issue invoice 81.97 + 18.03 VAT.

You deduct from 18.03 VAT 14.43 VAT paid. So you pay VAT to Italian tax authority 3.60 Eur only. So your real profit in transaction is 16.40 Eur.

If you are buying from Amazon, but from outside of EU, this numbers are the same. Just difference is that Amazon bills you 65.57 only and you pay 14.43 to Italin customs and 3.60 to Italina tax Authority.

If you are buying from other EU company, outside of Italy, it does not make any sens to buy for 80 and sell for 100, when you have to pay a VAT.

Generaly, there is absolutely NO WAY how to go around VAT in Europe.

Using a darks to open UK company and Emi account is a straight one way ticket to the prison.
Although a UK company has to bill a VAT. Using a UK company is no way.

You have to start selling for higher prices. No other way. And you need a company in a low tax juriscidtion in the EU. For this type of business, is the best Kft in Hungary.
Click to expand...

Thank you for this reply.
So i got what you say, in 100 euro i should pay 3.60 for vat. This could be good, the problem is that the receipts from amazon don't include the vat but just the final price.
So i can't understand how i can manage this i would like to pay everything.

And i wouldn't pay, how can i avoid in anyway? there are thousands company that avoid VAT in any country, how they operate?

You speak about darks and prison but i see that is very common thing here.

 

[onemansomewhere]

From which Branch of Amazon do you receive invoices?

Many people are dreaming about using a darks here. Because they believe, that it is a miracle medicine for their problem. Do you know, why you will never ever find here anyone saying that he had a problem eith darks? Because it is not allowed to use computer in a prison..

 

[uranio]

onemansomewhere said:
From which Branch of Amazon do you receive invoices?

Many people are dreaming about using a darks here. Because they believe, that it is a miracle medicine for their problem. Do you know, why you will never ever find here anyone saying that he had a problem eith darks? Because it is not allowed to use computer in a prison..
Click to expand...

I sell from almost all the brand in amazon, as i manage more than 40.000 items (growing).Anyway i looked right now i see that amazon release invoice from Luxemburg this's why i don't see vat and i see that i should apply the reverse charge in my company, but still i don't understand properly what is it and if would fit good with what i do.

I got about darks, but how big companies avoid vat? like for example amazon 🙂 or thousands of companies that go away with vat without paying it.

And if i would use like my grandmother or dad names for ltd company, just selling and not paying anything? as they own nothing and already have debit with governement, and anyway they live in Italy and the company would be resident in UK what risk would i afford?
What could happen to them? that uk would send a letter to Italy for looking taxes? 😀 to 80year woman?

And from these companies under their name i could invoice some my company in low tax company where i don't need to pay vat because the trade would be out eu or anyway not under vat purposes. Like hong kong. Would be good solution?

 

[onemansomewhere]

Revers charge means, that you count VAT+ and VAT- with the same amount. So when you receive invoice for 80 Eur, it is like 80+VAT. If you did not apply revers charge untill niw, you are due a high amount of money to Italian Tax authority, now.

In this case, you will have to pay full VAT from everything you sell. What does it mean for you? You have to increase your prices. No other way.

How Amazon do it?

They import from outside of EU. They use a full reverse charge.. All this companies use revers charge, when selling to business. But when selling to a final customer, VAT is applied all the time.

 

[uranio]

onemansomewhere said:
Revers charge means, that you count VAT+ and VAT- with the same amount. So when you receive invoice for 80 Eur, it is like 80+VAT. If you did not apply revers charge untill niw, you are due a high amount of money to Italian Tax authority, now.

In this case, you will have to pay full VAT from everything you sell. What does it mean for you? You have to increase your prices. No other way.

How Amazon do it?

They import from outside of EU. They use a full reverse charge.. All this companies use revers charge, when selling to business. But when selling to a final customer, VAT is applied all the time.
Click to expand...

Thank you. I edited the message but you replied sooner i think you lost the last modified so i'll report below here, plus another question.Anyway i buy from amazon as costumer (i put my costumer address there) and i don't see vat in my invoicess.. and i'm the final costumer..

new question:
If i opened the ltd company with uk address (lived in uk few years ago) and my italian address is not showing anywhere, and the ltd is resident in uk, what risk could i afford in Italy?

Questions that maybe you lost:

And if i would use like my grandmother or dad names for ltd company, just selling and not paying anything? as they own nothing and already have debit with governement, and anyway they live in Italy and the company would be resident in UK what risk would i afford?
What could happen to them? that uk would send a letter to Italy for looking taxes? 😀 to 80year woman?

And from these companies under their name i could invoice some my company in low tax company where i don't need to pay vat because the trade would be out eu or anyway not under vat purposes. Like hong kong. Would be good solution?

 

[onemansomewhere]

It does not matter whose address you use. You had to provide valid VAT to the Amazon. If they issue invoices with a reverse charge, they see you as a business. You have to have a business account with them.

Question:
If i opened the ltd company with uk address (lived in uk few years ago) and my italian address is not showing anywhere, and the ltd is resident in uk, what risk could i afford in Italy?
Answer: Uk company selling to consumers in Italy has obligation to be registered for VAT in Italy.
Any of your customers can inform Italian tax authority, that you issued them invoice without VAT. And you will have a serious troubles.

If you sell via UK LTD to Italy and to not bill and pay VAT, it is a criminal offence in Italy. Guardia di Finanza will arrest your grand parents,. And they will say to investigators very soon, whose business it is in a real. And you will spend som years in a prison.

So how does it work? Anyone from Italy who will receive invoice from you withou VAT will inform Italian Tax autority. They will check if you have VAT registration in Italy, if you paid taxes, sent returns.. If they will find that you did not, they will use special e-channel, which has all tax authorities, with taks to UK HMRC to provide all informations they hav about UK LTD owners, directors, UBOs... They will have all information in 72 hours. Everything will be sent to Guardia di Finanza. They will star a criminal investigation. They will arrest your grand parents. And very soon, you too.

 

[uranio]

onemansomewhere said:
It does not matter whose address you use. You had to provide valid VAT to the Amazon. If they issue invoices with a reverse charge, they see you as a business. You have to have a business account with them.

Question:
If i opened the ltd company with uk address (lived in uk few years ago) and my italian address is not showing anywhere, and the ltd is resident in uk, what risk could i afford in Italy?
Answer: Uk company selling to consumers in Italy has obligation to be registered for VAT in Italy.
Any of your customers can inform Italian tax authority, that you issued them invoice without VAT. And you will have a serious troubles.

If you sell via UK LTD to Italy and to not bill and pay VAT, it is a criminal offence in Italy. Guardia di Finanza will arrest your grand parents,. And they will say to investigators very soon, whose business it is in a real. And you will spend som years in a prison.

So how does it work? Anyone from Italy who will receive invoice from you withou VAT will inform Italian Tax autority. They will check if you have VAT registration in Italy, if you paid taxes, sent returns.. If they will find that you did not, they will use special e-channel, which has all tax authorities, with taks to UK HMRC to provide all informations they hav about UK LTD owners, directors, UBOs... They will have all information in 72 hours. Everything will be sent to Guardia di Finanza. They will star a criminal investigation. They will arrest your grand parents. And very soon, you too.
Click to expand...

Amazon doesn't see me as business, i looked all my invoices in all my account, as i told i just buy as any costumer and the invoice just report the final prive and is issued by amazon Luxemburg, so doesn't add vat to final costumer. i really don't figure out this.
So how people avoid vat doing dropshipping? or other businesses ?
I didn't hear in my life so long arrests for vat, at least in Italy.

 

[onemansomewhere]

The most of people has a company in country outside of EU and send a goods to cusometrs in EU, which are coming into EU. In that situation, customer is responsible to pay a VAT to a customs in its country.

 

[uranio]

onemansomewhere said:
The most of people has a company in country outside of EU and send a goods to cusometrs in EU, which are coming into EU. In that situation, customer is responsible to pay a VAT to a customs in its country.
Click to expand...

So maybe the best choose for me is go outside italian market o european market and going inside USA Market, so i would pay just corporation tax in my ltd. I see that there is not a lot workaround for this..so better to move business in usa with usa costumers and usa suppliers. Would be better?

 

[onemansomewhere]

The best is to move to the USA, selling there with reasonable structure of having a Canadian LLP, second residency - you as physical person, but not having a US suppliers. Once having a suppliers in the USA and selling in the USA, you will have to face US corporation tax - in case of Corporation, or US personal income tax - with LLC.. The most successfull sellers in US Amazon are using UK LLP or Canadian LLP, in combination with one offshore company and one offshore foundation + having a reasonable residency as a UBO..

 

[uranio]

onemansomewhere said:
The best is to move to the USA, selling there with reasonable structure of having a Canadian LLP, second residency - you as physical person, but not having a US suppliers. Once having a suppliers in the USA and selling in the USA, you will have to face US corporation tax - in case of Corporation, or US personal income tax - with LLC.. The most successfull sellers in US Amazon are using UK LLP or Canadian LLP, in combination with one offshore company and one offshore foundation + having a reasonable residency as a UBO..
Click to expand...

Thank you for your reply.
If a EU company sell goods in USA with USA suppliers or Chinese suppliers should pay just corporation tax in the country of residence in Europe, so why should i move to USA?
So i cn use the uk ltd or llp (why should i use a LLP instead the LTD?)

I spok with some consultant in Italy, they're studyng my case but they told me that i could just pay the corporation tax in Italy and not the vat because there is a structure in Italian taxes that is called "inderect sales" for the ecommerce where the vat is already paid from the supplier (like amazon) this's applyng just for the internet goods (not for digital as there is vat in this) but still i didn't get good, i'm waiting for consulting for them, anyway i already spoke with 2 differents and they told me the same that i'll need to pay just corporation tax if i put my legal rappresentative business for the ltd in Italy..

 

[WoWNull]

uranio said:
uk company + outside director + outside address = no company tax
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Hello i am not expert about the other parts, but this part is what i am asking if its really TRUE!!
for me i have UK LTD, i am not a UK/EU/USA residence, and the address is my LTD address by me as directory my country residence is not in UK.

so does this mean i don't need to pay taxes? because my financial year will be in August. so I need to know exactly what to do.

 

[uranio]

WoWNull said:
Hello i am not expert about the other parts, but this part is what i am asking if its really TRUE!!
for me i have UK LTD, i am not a UK/EU/USA residence, and the address is my LTD address by me as directory my country residence is not in UK.

so does this mean i don't need to pay taxes? because my financial year will be in August. so I need to know exactly what to do.
Click to expand...

If you trade outside uk you don't need pay taxes in uk 🙂

 

[WoWNull]

uranio said:
If you trade outside uk you don't need pay taxes in uk 🙂
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I am selling digital products ( Proxies, Codes i developed etc.. )
but i do have few clients in UK

 

[uranio]

WoWNull said:
I am selling digital products ( Proxies, Codes i developed etc.. )
but i do have few clients in UK
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i think you should pay in uk just for the costumers in uk.
But better you speak withan accountant