EU: As a reseller is it possible to avoid automatically paying VAT on purchases made outside EU

[jonesgold]

Hi

As the title says, is it possible to avoid to automatically paying VAT on purchases under 150 euros outside from outside of the EU where Ebay handles the shipping (China)

All orders with the GSP are also automatically added VAT, and for the moment I have to use a reshipper in US and UK to avoid these charges, that er non refundable.

For US charities Ebay.com has a tax excempt program, but I have not been able to find similar programs covering the EU. 

[lacemaker3]

@jonesgold,

That's not how VAT works. Every time something is sold, VAT is due, even if it is purchased for resale, or as a component that will be built into something else and sold as a finished product. 

As a business seller, you need to register for VAT in your country. Then when you purchase items for resale, you pay the VAT, and then when you sell them, you collect the VAT on the selling price. When you file the VAT report and send the VAT to the government, the amount of VAT you paid is deducted from the amount you collected, and you only send the difference to the government.

That's why it's called Value Added Tax; because you only pay VAT on the amount of value that you added to the product when you resold it.

[jonesgold]

Thanks for the response, but it is not 100% accurate for the EU.

As a reseller I am VAT registered and also as registered as an importer.

Your example covers how VAT works when buying and selling within the same country, for me it would work when the company I buy from is located in Denmark and I sell the goods again.

But goods that I buy from another EU country or 3rd country (anything outside EU) , before the goods pass over the Danish border, they are invoiced VAT free, but I have to inform the tax office the value of the purchase.

So when Ebay automatically adds VAT from 3rd countries, these cost are not refundable for business, and ends up being a cost increase instead. 

[lacemaker3]

If you are VAT registered, then you should register as a business seller with eBay. Then you provide your VAT registration number, and eBay will not collect VAT on your purchases.

https://pages.ebay.com/vat-eu/

[48hrs-clothing]

Re: As a reseller I am VAT registered and also as registered as an importer.

In this case at point of entry to your country you would pay VAT on goods that you import.

Vat on goods that you are reshipping through freight forwarders should also be collected/ paid as these goods enter your country and if this is not happening then whilst this is irregular and this gets corrected when you collect and pay VAT on final sale value as VAT  is a tax on final customer/ consumer and not a tax on businesses as a VAT registered business accounts for difference between Input and output values only.

Re: GSP are also automatically added VAT, and for the moment I have to use a re shipper in US and UK to avoid these charges, that are non refundable

I suspect you receive an invoice from eBay's third party / shipper (GSP) showing charges and their breakdown and VAT amount is paid to your country by GSP and you may be able to avoid this VAT charge being applied at point of purchase if on eBay you register as a business seller and provide your valid VAT registration number. 

Alternatively you could enter  the whole invoice value including item price, shipping and other Import charges which include VAT as zero rated and in your purchases and then sell the equal value as same zero rated VAT goods and the additional mark up/ resale value as standard rate will result in you collecting and paying correct value to your government.

 Following is an illustration only.

Purchase value including ship+ import charges = 100 and entered in your purchases as 0% Vat.

Resale value = 220

Enter sale as 0% Vat = 100 to balance your purchase

Enter sale as 20% Vat = 100

Vat @20% on 100 = 20

Total = 220

You should ask your accountant / tax advisor to confirm/ check that what is suggested is allowed/ accepted by your tax authorities.

[7606dennis]

Since many of the responders on this board are USA based you might have better luck getting more accurate responses from one of the other site's boards.  US sellers don't deal with VAT for the most part.