How do drop shippers pay VAT


#1

I was looking at a dropshippers details on Ebay and noticed that they gave a VAT number, now as VAT is payable on turnover not profit then they would have to pay VAT on the whole amount not just their percentage. Their VAT payment would be huge as they also have no input to set against it


#2

Margin/Global accounting allows you to charge VAT on markup rather than full price if you are unable to recover input VAT. At least that is how I think it works…


#3
  1. If you’re NOT VAT registered you don’t have to account for VAT at all. Not all drop shippers achieve £85,000 annual turnover

  2. If you’re VAT registered then you can reclaim input VAT on purchase price and pay the VAT on sale price

  3. If you’re VAT registered but you buy from NON-VAT registered entities, you can use VAT Margin Scheme (Notice 718), whereby you pay VAT on the difference between purchase and sale prices. However, you have to use special “Margin Scheme” invoice whereby your buyers are unable to claim VAT back. You also have to keep detailed stock purchase records…


#4

They still have to purchase the item they move onwards though. This would be their input VAT purchases.


#5

Have you tried getting invoices, let alone VAT invoices out of Amazon purchases? Blood from a stone I tell you. Probably end up with fewer than 75% of orders with a proper invoice and probably fewer than half the people we buy from turn out to be VAT registered (or issuing VAT invoices).


#6

If you’re NOT VAT registered you don’t have to account for VAT at all. Not all drop shippers achieve £85,000 annual turnover

I said they gave a VAT number so must be registered

If you’re VAT registered then you can reclaim input VAT on purchase price and pay the VAT on sale price

To reclaim input you have to have a invoice


#7

i don’t understand where the difference is with regards to VAT? they buy something for a price and they sell for a profit. it works exactly the same if there buying in the stock and holding it and selling it on. the amount they pay is based on the exact same parameters. I suspect that are some dropshippers out there with huge vat bills and others with none just as there are some retailers with massive vat bills and other smaller ones without. this entire subject is pretty pointless


#8

The issue is that a drop-shipper probably sources from hundreds or even thousands of suppliers and needs to manage invoicing from all of those suppliers (if they want to properly account for VAT at least). A stockist probably sources from a few wholesalers or distributors and gets proper paperwork each time.


#9

You can just download the vat invoice automatically if they are vat registered on amazon it is in your purchase portal


#10

Then why waste your time answering


#11

Very few sellers are.


#12

i still dont see the point you are trying to make all this means is thers alot of paperwork to go with their vat accounts. There is no limit, you can supply as many invoices as is needed. the subject is still completely pointless.


#13

Then stop reading/participating!


#14

Don’t forget the flat rate scheme exists… Then no need to worry about invoices for purchases


closed #15

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