VAT advice for Co. manufacturing in Poland

karlkarlson

Hi,

We're an Irish online clothing retailer in business planning mode and we're trying to find out the answer to some questions. The local chamber of commerce rep. simply threw us on a bunch of links that may take hours to wade through so I was hoping to at least get an indication on some of our questions below.

--Are products manufactured by a third-party in Poland under contract and then shipped to Ireland classified as imported products if they are being sold to individual customers from Ireland only?

--Do we pay VAT for purchase of the raw materials (fabric, zippers etc.) for said products in Poland?

--Do we pay VAT on the cost of production in Poland?

--Do we pay any duty/VAT on top of shipping costs for the finished products leaving Poland?

--Do we pay any duty or costs on top of shipping costs for the finished products entering Ireland from Poland? (indication is that no VAT is paid but a Customs declaration is need for goods over €650)

Thanks to anyone who can help us with this!

dbran

Hi

Poland is part of the EU, therefore if you are vat registered and you give the Polish company your Irish VAT number they will zero rate the VAT. You will then charge your customers Irish VAT on the sales and account for the Inter Eu acquisition via the reverse charge mechanisim.

You do not pay any duty if the goods are not entering the EU. The €650 declaration you refer to is for goods that are coming from outside the EU.

Regards

dbran

karlkarlson

Thanks dbran.

I just have one question on one aspect. What do you mean by:

account for the Inter Eu acquisition via the reverse charge mechanisim

beazee

"Reverse Charge" is a part of the VAT law in a growing number of European countries.

It states that the VAT (Value Added Tax) for Goods and Services delivered inside the country by a foreign company is owed by the recipient of the goods and not by the foreign service provider/supplier.

VAT must not be charged on invoices to the recipient. By law, a clear statement must appear on each of these invoices indicating that the liability for the payment of VAT is reversed to the recipient.

The recipient has to calculate, report and pay the VAT (it may be recoverable if the recipient is VAT registered).

The foreign service provider/supplier may be entitled to a VAT refund claim for all VAT charges by local suppliers.

Please contact a local accountant or the VAT authorities in the country in which the event will take place, well in advance of the time it is organized/scheduled to commence.

http://www.insatax.com/pages/reversecharge.php

dbran

Hi

Information on the reverse charge basis or "postponed accounting" basis is available here.

http://www.revenue.ie/en/tax/vat/leaflets/VAT-eu-intra-community-acquisitions.html

Kind Regards

Dbran

karlkarlson

Thanks folks.

I can get into this with an accountant at a slightly later date. But for now, just so I have a basic understanding--as this aspect really is news to me--I would not be charged VAT by a Polish supplier if I was VAT registered but I would be required to calculate this myself and then pay it. Then at a later date I might be able to get a refund? It doesn't seem very straightforward!

beazee

Once you're VAT registered and dealing with VAT registered PL company:
Supply them with your VAT no. - pay "no VAT" invoice - pay VAT on your sales in Ireland

If you're not VAT registered - you pay full price (23% VAT incl) in Poland.