Selling as an UK company to the rest of the world - how?

[n00b]

One thing is confusing me. For example, if I have opened the LTD company in the UK, and selling in the US - I don't need to pay sales tax in the US until I hit the threshold right? The only thing i'll pay is Corporate tax in the UK when the time for it comes?

For stuff I sell in the UK (via same Shopify store) I'll pay 20% of VAT + same as above ie together on everything I earned, Corporate tax? If I got this wrong please scream at me 😄 (just watched around 8 hours of this topic on YT and I'm even more confused). 

Now - When u just start with Shopify, you have already in shipment options Rest of world. Now I don't understand if we talking about being aligned with laws, taxes and all that stuff... how actually to sell/ship everywhere and still satisfy the legal stuff? Is that even permitted/possible without having companies or paying tax in a bunch of these countries? If anyone can answer me from experienced users I would be really grateful. I'm a designer, but all of these legal and taxes stuff is completely new to me...

Also, found this info on the internet, but not sure is it still an actual thing or not, if you have registered a company in the UK, but you want to sell in the US:

You shouldn’t have to pay US taxes on your sales, but your US customers may need to justify paying funds to you without withholding tax. To be on the safe side you should fill in form W-8BEN-E. You can find it here: http://www.irs.gov/file_source/pub/irs-pdf/fw8bene.pdf Its very easy and quick. Instructions on filling it in can be found here: http://www.irs.gov/file_source/pub/irs-prior/iw8bene–2014.pdf This allows your UK Ltd company to register with the IRS as a foreign entity doing business in the US. It confirms that because you are a UK company and covered by the UK-US tax treaty, your company income is taxed in the UK and thus you aren’t liable for US taxes on your US sales. Your US customers may need to see a copy of the completed form when paying your invoices.

[Nick · Accepted solution]

Hi @n00b,

No worries at all. I know how complicated it can be to figure it all out. Ah, I understand what you mean, yes I guess it is down to finding an accountant who understands exactly what you are doing and who can give you the tips you need to get this correct from the outset. Is there a local tax office you could also visit to ask some of these questions also? They might have a more clear cut answer for you on some of these questions. 

1.) My situation is a little different. We are registered in Ireland, but currently only selling to the US (for logistical reasons) and thus only charging customer taxes for the US right now. 

We will pay our company government tax since we are VAT compliant in our company tax set up. Once we start selling in Europe, we will look into charging those customers VAT. 

2.) Yes, that's correct. I don't believe this would change, it would be the company or corporate tax at the time we would need to pay it which is generally yearly. 

[Nick]

Hi @n00b,

Nick here from Shopify. Great question as taxes can be difficult to figure out at the best of times. 

The first thing I always suggest when asked something like this is to talk to an accountant in your area or your local tax office. They will know better than anyone on what kind and how much taxes you need to pay. From experience and setting up my own store ( I am based in Ireland) you would only pay taxes for the country your store is based in. So for example, if you are in the UK, you would only pay UK taxes even if you sell to customers in the USA, Canada or wherever else. This is mentioned in what you quoted below also from what you found which makes sense, but I am not 100% sure of the tax laws within the UK. 

Shopify has a guide on how to set up your taxes for countries outside of the USA and Canada which you can see here. Something else which might be worth looking into is tax overrides and exemptions which might be useful for unique tax rates for shipping destinations or to tax-exempt customers such as customers in the USA. You can see the guide Shopify has for this here. 

Hopefully, this helps and points you in the right direction for the next steps. If you have any other questions, don't hesitate to ask. 

All the best, Nick

[n00b]

Hey @Nick , thank you for your opinion!

Thing is, very quickly I found out that every accountant has a different opinion haha. So at this moment, I focused on finding an accountant specialised for e-commerce for my business...

1. If I may ask; You said your company is registered in Ireland, so basically your customers will pay (you will charge it) VAT only if they are from Ireland? And all rest of your customers (let's say if they are from US, Canada or some  European country) will not need to pay tax/VAT ie you will not ask them to pay for it at your checkout cause they are outside Ireland?

2. And all the income that will pass through your company account whether it came from the US, Canada or dunno... Croatia, you will just pay corporate tax to Ireland when the time for your company has came to pay it, right? If I understood you well? 

I know many people will say - just take care of that once you hit threshold or earning a lot to be worried, but in my opinion is good to approach all the stuff professionally from the start, especially if you are new in something. Cause this is business at the end of the day...

[Nick · Accepted solution]

Hi @n00b,

No worries at all. I know how complicated it can be to figure it all out. Ah, I understand what you mean, yes I guess it is down to finding an accountant who understands exactly what you are doing and who can give you the tips you need to get this correct from the outset. Is there a local tax office you could also visit to ask some of these questions also? They might have a more clear cut answer for you on some of these questions. 

1.) My situation is a little different. We are registered in Ireland, but currently only selling to the US (for logistical reasons) and thus only charging customer taxes for the US right now. 

We will pay our company government tax since we are VAT compliant in our company tax set up. Once we start selling in Europe, we will look into charging those customers VAT. 

2.) Yes, that's correct. I don't believe this would change, it would be the company or corporate tax at the time we would need to pay it which is generally yearly. 

[n00b]

I see - Then my last question to you @Nick ; if I decide like you, to sell just to people in the US while my company is in Ireland (just to illustrate question, also for logistical reasons let's say);

If I collect that tax from the US customers (turned option Calculate taxes automatically for US), that collected tax, I need to pay to US OR to Irish government, at the end of the company year through that Company/Corporate tax (you will pay them, in your case 12.5%, from the total sum you eared right, approx)?

( that part I didn't understand you well, sorry ^_^* )

[Nick · Accepted solution]

In this instance @n00b, I would only pay taxes to the Irish government at the end of the year as that's where my company is located. I wouldn't have anything to do with the USA government or their tax laws in any way. I'm not 100% how this works exactly in the UK though, it could be different. Tax law is complex so I can't stress enough or strongly advise you to seek advice from qualified, experienced tax specialists on all aspects of the tax treatment of selling online.

[n00b]

These infos are of huge help to me. And yes I'm fully aware that is the best to consult with tax specialist. Yet, all these info now have clarified many things in my head and now I have at least base to search further and know what exactly to ask hehe... 

Thank you @Nick one more time for your help and explanations!!! Cheers!! : ))

[Mimi22]

Hello @n00b , I m wondering if you got more information about this subject because I m asking myself the same question as you. I REALLY NEED HELP. If you can even send me your mail address or contact so we can have a little discussion on this. Thank you so much!! 

[ali426]

if you finded answer to your Qs can you help me too @Mimi22 

[ali426]

@Nick 

hi

 I know long time was passed for this issue 

Sr, I have too Uk based LTD company ,

I have shopify store and I dropshipper I don't have my own  inventory and I am newbie .let's say I dropship from Aliexpress or spocket

if I can ask you ,my Q is 

when I my customer buy from my store what the form of invoice have to be??

I mean on the invoice should I write my company address or not because I can't understand

my company based in UK but  in fact the product will be shipped from another supplier from china so for the UK government was this product shipped under my company from UK or it was shipped from china ??

one more thing when I place an order in Aliexpress I should write my customer name and his address and in check out  Ali charge me  VAT okey?

so in this case when this product arrive to UK customs will they ask to see for example my company VAT number or Chinese supplier VAT number ( the supplier here is Ali express) shortly 

who is responsible to release the order from customs my company or Ali express supplier/

finally as a company when I place order by Aliexpress how can I improve that this order price was paid by my company 

I need to keep this order  as one of the company's expenses 

[Nick]

Hi @ali426,

No worries, good questions! 

I would firstly recommend to speak to a legal representative or an accountant about this. We wouldn't be experts in areas such as these. If it was me though, I would make the invoice my companies primary address. 

Regarding where you should say your product is shipped from, I would be truthful and say it's China. Can I ask, where you are looking to say this though? Is this something the UK government is asking or just generally for your customers? 

Regarding the VAT, this is something you should definitely double check with your accountant. I can guide and show you how to set up VAT for your store, but I can't say for certain when and where you need to charge it. 

I'm not 100% sure what you mean by:

---

finally as a company when I place order by Aliexpress how can I improve that this order price was paid by my company 

I need to keep this order  as one of the company's expenses 

---

Do you mean, you want to prove that your company purchased the items from Ali Express? Let me know. 

[ali426]

, where you are looking to say this though? Is this something the UK government is asking or just generally for your customers? 

   it's for me ^_^

read this please ,

he tell us if  "I" sell to my country I have to charge VAT sure if hit the threshold in that country (this what I could understand and I don't know if this includes Uk)

this situation confuses me my company in UK and customers buy from me but I use aliexpress to ship to them

so do I sell to my home country -UK in this case-

or not ,Aliexpress he who sell UK customers because I give him all my  customer details like his name ,address in Uk   even aliexpress himself charge me VAT because I type one UK  address 

Do you mean, you want to prove that your company purchased the items from Ali Express? Let me know.

exactly ,bcz when I give my customer invoice with 50 $ value it shows that I receive 50 as income but not all of this is 50 is revenue I should cut  25 product cost first.

@Nick  

[Nick]

Hi @ali426,

If it's just for yourself, then you could write an information page of some kind and link it to your store so it's visible for your customers, kind of like a privacy policy page of sorts, but this could explain this aspect of your business. Personally, I feel it could complicate things if you mention AliExpress to your customers as they could just go to AliExpress also. If your business is in the UK and you run it from there, then I would look to follow the UK business laws primarily over anything else and then speak to an accountant about the VAT aspect on the shipping from a different country.