Northern business trading in Republic

Buttercake

I have a client who has a competitor based in Antrim and operates a similar service (for cheaper) in the Republic. The competitor is a sole trader registered in the Uk with no business/vat registration here. My client is feeling the pressure as the competitor is not charging vat which is saving 23% in a tight margin product.

Are business in the North(UK) "allowed" to trade as normal in the Republic or are they supposed to register here as a business? Thanks in advance

dbran

It depends on the service and place of supply rules.

Unless the sales are to non business customers it should not matter whether or not VAT is charged as the customer just claims it back on their vat return.

dbran

bulleyes

It would depend on the turnover generated on the southern irish side of northern guys business.

Once the monitery total of goods and services suppiled to another eu country exceeds that countries set figure a supplier is required to register for vat in the country the goods are supplied to, charge vat according to the rate set by that country and make vat returns to said country.

relaxed

bulleyes wrote: »

It would depend on the turnover generated on the southern irish side of northern guys business.

Once the monitery total of goods and services suppiled to another eu country exceeds that countries set figure a supplier is required to register for vat in the country the goods are supplied to, charge vat according to the rate set by that country and make vat returns to said country.

Not if you are supplying to trade customers who are VAT registered AFAIK.

bulleyes

Good point, the OP never stated if it was a b2b or b2c supply.

Assuming it were a supply of goods to a vat registered customer, there shouldn't be such a difference in price.

EG i sell a door for €100 + 23% vat to a vat registered customer in the south. customer pays me €123 euro and claims €23 euro back in their regular return. customer in the south has paid €100 for the door.

Northern supplier sells the same door for €100 euro To the same vat registed customer, he doesn't charge vat as its an inter eu transaction so the customer still pays €100 for the door.

Thats why I'd assume the northern supplier is a non vat registered supplier suppling a non vat registered customer as opposed to a transaction where both parties a Vat registered.

Buttercake

Thanks for the posts

It's a B2C service, no selling to trade..

The guy in North sells the product for €50, guy in Dublin €50+vat (23%) straight to general public

I wonder are there monetary limits as to how much business you can do from the North to the south?

terryhobdell

I dont follow this how can you sell something for €50 from north to Dublin and then have the guy in Dublin sell it on for €50 + VAT at 23% is he pocketing the 23%? if he isnt where is the profit? if he is report him. If the Northern company isnt VAT registered it cant be a big operator as the registration limit is £79.000 so how is it able to effect a business in The Republic to such an extent?

relaxed

Buttercake wrote: »

Thanks for the posts

It's a B2C service, no selling to trade..

The guy in North sells the product for €50, guy in Dublin €50+vat (23%) straight to general public

I wonder are there monetary limits as to how much business you can do from the North to the south?

How do you know there is not 20% VAT included in the price and that it is not just a case of him being more competitive than you?

I know something that is sold in one shop here for €500 including 23% VAT and another shop sells it for €700 including 23% VAT.

Nuttzz

relaxed wrote: »

How do you know there is not 20% VAT included in the price and that it is not just a case of him being more competitive than you?

I know something that is sold in one shop here for €500 including 23% VAT and another shop sells it for €700 including 23% VAT.

This is a good point, there is a simple way to look at this, buy something from him as a consumer and get an invoice, if there is no vat on it then report him to HMRC in belfast, if there is VAT on it then the situation above applies

Peterdalkey

These rules apply to distance selling and VAT http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html This explains why Amazon Uk charges 20%VAT to the UK customers and now charge 23% VAT on Irish sales.

relaxed

Nuttzz wrote: »

This is a good point, there is a simple way to look at this, buy something from him as a consumer and get an invoice, if there is no vat on it then report him to HMRC in belfast, if there is VAT on it then the situation above applies

But if he is not VAT registered then he does not have to provide a VAT invoice, he just pays the VAT at point of entry assuming its imported from outside the EU.

bulleyes

If his total value of goods supplied to Southern Ireland exceeds 35K he should be Vat registered In the South.

"3.2 Where the value of distance sales to the State by a supplier in another EU Member State exceeds €35,000 in a calendar year that supplier must register for VAT in the State and must account for VAT at the appropriate Irish rates."

Taken from here http://www.revenue.ie/en/tax/vat/leaflets/foreign-suppliers.html#section3

Peterdalkey

bulleyes wrote: »

If his total value of goods supplied to Southern Ireland exceeds 35K he should be Vat registered In the South.

"3.2 Where the value of distance sales to the State by a supplier in another EU Member State exceeds €35,000 in a calendar year that supplier must register for VAT in the State and must account for VAT at the appropriate Irish rates."

Taken from here http://www.revenue.ie/en/tax/vat/leaflets/foreign-suppliers.html#section3

This, in general, applies only to sales to consumers and not to B2B trading goods between VAT registered entities in different EU countries. There are different specific rules for certain trades including transport, various services etc etc

Nuttzz

relaxed wrote: »

But if he is not VAT registered then he does not have to provide a VAT invoice, he just pays the VAT at point of entry assuming its imported from outside the EU.

True, but if he doesnt provide a VAT invoice it gives the OP something to work with in relation to a HMRC complaint, they will decide if he is compliant or not

bulleyes

Peterdalkey wrote: »

This, in general, applies only to sales to consumers and not to B2B trading goods between VAT registered entities in different EU countries. There are different specific rules for certain trades including transport, various services etc etc

Exactly right. The OP's query in in relation to Consumer supply only.

Buttercake

thanks for comments

(these figures are for illustrative purposes, the exact amounts are different)

The product is generally sold in bulk with a RRP here of €50 per piece, the guy from the North advertises the product online for €50, delviered and payment in cash.

however the guy in Dublin sells it for €61.50 vat included. I don't think the total annual sales would exceed the threshold in the UK, but just wondering what/if anything can be done against a "technically" UK business operating here

I think lodging a complaint to the HMRC might be the only course of action, Revenue will be clueless here

bulleyes

I'm afraid there's nothing you can do other than try to source the product at a better wholesale price.

We are all part to the EU. Free trade and all that....

jimmii

Is he not just exporting a product? What is it you thing he is doing wrong?

Peterdalkey

Buttercake wrote: »

thanks for comments

(these figures are for illustrative purposes, the exact amounts are different)

The product is generally sold in bulk with a RRP here of €50 per piece, the guy from the North advertises the product online for €50, delviered and payment in cash.

however the guy in Dublin sells it for €61.50 vat included. I don't think the total annual sales would exceed the threshold in the UK, but just wondering what/if anything can be done against a "technically" UK business operating here

I think lodging a complaint to the HMRC might be the only course of action, Revenue will be clueless here

What an extra ordinary post. It is called "competition" and we are part of the single market that is the EU! Free trade between states is a key component of trade and as we are such a huge exporter ourselves. our exports are some other countries imports!

Buttercake

Peterdalkey wrote: »

What an extra ordinary post. It is called "competition" and we are part of the single market that is the EU! Free trade between states is a key component of trade and as we are such a huge exporter ourselves. our exports are some other countries imports!

Thanks, my point may have derailed a bit. My example was:

Company A - Registered in North Ireland, Vat Registered in UK
Company B - Registered in Republic, Vat Registered in IE

Both sell the same product in Republic of Ireland to consumers, Company A for less because they don't charge vat as they are a UK company and it gives room to discount the product.

<topic/>

Peterdalkey

Buttercake wrote: »

Thanks, my point may have derailed a bit. My example was:

Company A - Registered in North Ireland, Vat Registered in UK
Company B - Registered in Republic, Vat Registered in IE

Both sell the same product in Republic of Ireland to consumers, Company A for less because they don't charge vat as they are a UK company and it gives room to discount the product.

<topic/>

If they are selling to retail consumers who are not VAT registered in the Republic, they must charge VAT. If the Republic customers are VAT registered they do not have to charge VAT.