I will soon be launching an ecommerce apparel brand (print on demand) on Shopify as a sole proprietor.
Here is my situation:
I currently am a digital nomad but a UK and US national, with my main account to receive revenue being in London, UK.
I am exclusively using a US-based supplier to print and fulfill my clothing products for my store, and mainly selling to the US but also at some point internationally.
I will be connecting my UK bank account to my store to receive earnings into.
As I understand, I am not required to pay sales tax to the US until I hit a certain threshold (as per current information – Economic Nexus Threshold: $100,000/year in gross revenue or 200 or more separate transactions on the previous or current calendar year's sales).
However, am I required to pay VAT to the UK government:
1) because my account receiving sales revenue is in the UK and I am a UK citizen?
2) am I required to pay this immediately or is it also only once I hit a certain threshold of revenue made?
Lastly, is collecting tax based on how much revenue you make selling to a particular country overseas? i.e. if I end up having a large number of German buyers, even though I am not a German citizen, do I owe tax to the German government?
What is confusing me is that there is mixed information online as to the validity of the 'distance seller threshold' for VAT tax in UK and EU... some say the threshold is still in place, others say that has recently ended.
VAT is a tax on products sold, it is not a corporate tax. So if you are not selling to UK customers, there is no UK VAT. There will be other taxes on that corporation.
VAT is payable on all sales for deliveries from US to EU and UK. We strongly recommend registering to EU IOSS and UK VAT as your goods clearly fall under the thresholds 150€ / 135£. Regardless of your sales amount.
You should have a corporate bank account for clarity.