VAT Question re subscription website

[Bartos]

If I set up a UK Ltd company (UK is offshore for me) and run a subscription website, do I have to pay VAT on customers who do not reside in the UK?

I read in one place that I have to pay tax to the UK at whatever rate they have in the customer's country? (seems like a mess to calculate every customer).

I read somewhere else I have to pay VAT to the Tax Office of the country the customer resides in?


Is anyone able to clarify this?

 

[TurnedToRobot]

If it is a legit long term setup then the answer is yes, you have to charge VAT or collect the VAT number from the customer (means only businesses have such) so you don't need them to pay VAT to you.

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[Bartos]

So if the business is a UK Ltd then no matter where the country the customer is from, I have to forward VAT (which is included in the price they pay) to the UK tax office?

Yes - this is intended to be legit long term.

 

[BillBong]

Gibraltar has no vat and is outside EU, try there.

 

[JohnLocke]

Bartos said:
So if the business is a UK Ltd then no matter where the country the customer is from, I have to forward VAT (which is included in the price they pay) to the UK tax office?

Yes - this is intended to be legit long term.
Click to expand...

You have to charge the local VAT rate (UK VAT rate) to customers without a VAT number, that's how everyone else is doing it. Some even charge you VAT while you enter your VAT number which is wrong.

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[Bartos]

Admin said:
You have to charge the local VAT rate (UK VAT rate) to customers without a VAT number, that's how everyone else is doing it. Some even charge you VAT while you enter your VAT number which is wrong.
Click to expand...

So more or less, if I set up a UK company I have to pay 17.5% VAT of all subscriptions to UK tax office?

 

[BillBong]

Bartos said:
So more or less, if I set up a UK company I have to pay 17.5% VAT of all subscriptions to UK tax office?
Click to expand...

No, it's 20% VAT in UK.

https://www.gov.uk/vat-rates
If it's ruled that the subscription based service is based on the user's residency then that's another nightmare you'd be revealing upon yourself aka You would also have to sign up for VAT MOSS so charge individual rates of VAT to other EU countries.

 

[TurnedToRobot]

Bartos said:
So more or less, if I set up a UK company I have to pay 17.5% VAT of all subscriptions to UK tax office?
Click to expand...

it is not something you pay, you charge your customers the 17,5% and send it to the UK VAT office.

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[Bartos]

Ok, I've done some research.

If I have UK company I'd be subject to VAT to the country of each customer. There's a set up to bundle all EU countries in together. US have no VAT. With AU customers I would pay the VAT/GST to the AU tax man.

 

[BillBong]

Bartos said:
Ok, I've done some research.

If I have UK company I'd be subject to VAT to the country of each customer. There's a set up to bundle all EU countries in together. US have no VAT. With AU customers I would pay the VAT/GST to the AU tax man.
Click to expand...

The EU bundle is called VAT MOSS.

 

[TurnedToRobot]

Changes to VAT MOSS from 1st January 2019
If you sold less than £8,818 worth of digital services to consumers in the wider EU in 2018, you don't expect to sell more than that in 2019, and you don't have a base in the wider EU, then you'll no longer need to charge local VAT - you can charge UK VAT instead.

Or, if your VATable sales are less than £85,000 a year, you can de-register for VAT altogether and not charge your customers any VAT.

HMRC have more guidance on this here.

Example of VAT MOSS:
Jackie sells .pdf knitting patterns online. She has customers across the world and her sales are £10,000 a year.

Maria buys one of Jackie's knitting patterns in Spain. Jackie must charge Maria Spanish VAT on that sale, at the Spanish rate of 21%.

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[fshore]

BillBong said:
Gibraltar has no vat and is outside EU, try there.
Click to expand...

You would still have to charge VAT from EU customers with a Gibraltar or other non EU company.