Take 100% control of your business in England
Up to 30% is being added to the original purchase price
Now that Brexit is in full swing, we are unfortunately seeing signs that many private customers in the UK are disappearing from European stores and websites.
Customers forgo deliveries. This happens when they are presented with an extra bill for customs and VAT to have their goods handed over. It is not uncommon for up to 30 percent of the purchase price to be paid in taxes due to the type of product and where it is produced.
This is, of course, a threat and a warning to European businesses that the setup and business model must change in order to maintain earnings within the English market.
Here is a suggestion for you and your business.
Become your own importer
In order to sell goods and send them to England, a lot more administration needs to be done. If the goods are small to medium-sized products, it can quickly become a large amount of administrative work.
Instead of doing everything from your home country, we can recommend establishing an English company that handles that part of your business. Your company then becomes your own importer in England. Your EU company must be registered for export and your goods must have the correct product codes.
The company in England will handle the import of your products and ensure that you can sell and deliver the products to your English customers. By importing your own products in larger quantities at a time, the administrative work will be less per unit and thus reducing the indirect costs.
VAT will be easier to handle in your European company
When you send goods from Europe to England, your local company does not have to add VAT when selling goods, as it is now outside the EU. This sale must be reported in box C of the VAT return.
When selling goods in England, your English company must settle the VAT. However, there is a special factor that you need to take into account around VAT. An English company does not have to register for VAT until it has a turnover of more than £ 85,000 annually.
If you turn over less than £ 85,000 a year selling to English customers, you cannot add VAT if the company is not VAT registered. VAT does not need to be added on the sale of goods and services sold and supplied outside of the UK.
If your business in the UK has a turnover of more than £ 85,000 a year in the UK, you need to register for VAT and this needs to be settled on a quarterly basis.
Please bear in mind that VAT can be a complex subject and therefore subject to possible errors. CPIE Services works with various accountants and lawyers in the UK who can assist you in specific situations.