Question: My company sources and imports products for a client company. From a VAT/Tax perspective,am I selling products or providing a service?

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Import/Export

My company sources and imports products for a client company. From a VAT/Tax perspective,am I selling products or providing a service?

For example: I source the £10,000 worth of products for Company 'A' directly from the factory. Company 'A' pays me £10,000, I pay the factory and arrange the products to be delivered to Company 'A'. I make my money by charging the company 2% more for the items than the factory prices them at. Should I be charging the company VAT and Tax on the items ? or am I just providing a service?

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Answers

Colin Post

Vendor/blogger with 10+ years in Latin America.

Disclaimer: my business is based in the U.S. with little experience in the UK and EU. But I'm inclined to believe that if you are the entity legally importing the merchandise, you pay VAT. Your client would pay VAT only if the import documents list their name as the consignee. If you only wanted to charge a service of clearing customs and taking possession at the port without VAT liability, you would probably need to be licensed as a customs broker.

Again, I'm not an expert in clearance. A customs broker could better explain it, but I'd bet dollars to donuts I'm on the right track.

Thanks for your question!

Answered over 5 years ago

PRIYANK GOEL

Chartered Accountant (Equivalent to CPA)

As the name suggest VAT is tax on value addition and in your you will be liable for tax on 2% of value addition.
I.e you will pay tax on 10200 Euro and take input of tax on 10000 euro.

Answered over 5 years ago