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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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Hello, with an Irish company I would like to sell (b2c) items

Resolved Question:

Hello, with an Irish company I would like to sell (b2c) items across Europe using a wholesaler based in Spain which offer the dropshipping service. For example, I sell 1 product (a fruit juicer) in ebay to Lise, a french customer, through ebay. Lise pays my Irish ltd, my Irish ltd buys from the spanish dropshipper the fruit juicer and the spanish dropshipper send to Lise, in France, in an anonymous parcel, the fruit juicer.
My Irish accountant says that I CANNOT do that because Lise will pay the price of the fruit juicer + the spanish vat, because it must be added the vat related to the country from where the shipping is originated. And because of that I cannot make an invoice from my Irish ltd where appears a spanish % vat. My Irish accountant says that the only for doing that is: create a spanish company or buy in wholesale lots of fruit juicer, store them in a warehouse in Ireland and from there ship 1 fruit juicer to the poor Lise in France that probably changed her mind about wanting the fruit juicer in the meawhile. Is it really like that? Thank you very much. Best regards. tom
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello,
You are very fortunate to have such a knowledgeable adviser on your VAT situation. Yes, your situation is as your accountant advised.
The place of taxation is determined by where the goods are supplied.
This not only depends on the nature of the goods supplied, but also on how the supply is made.
I wish I could tell you differently.
Customer: replied 3 years ago.

hello, thank you for your opinion.


could you explain this better: "This not only depends on the nature of the goods supplied, but also on how the supply is made" ?

Expert:  TaxRobin replied 3 years ago.
The nature of the goods would relate to if the goods were service or actual product.
You are delivering a product so the place of delivery is relevant.
How the supply is made is important because of the drop shipping you are utilizing from a third country.
For supplies of Business to Consumer services (B2C), the place of taxation is the place where the supplier is established. But the B2C on goods is where the shipping is supplied.
VAT is where the goods are located when the dispatch or transport to the customer begins, if they are dispatched or transported by the supplier, by the customer, or by a third person.
Customer: replied 3 years ago.

last question. following what you wrote. if I sell a service "ask me a question about the fruit juicer" supplied from ireland, like this website is doing and I give as a free gift to every customer that use that service one fruit juicer delivered at home from spain, in that case the fruit juiced would be a FREE and secondary add-on to the main "ask me a question" service supplied from Ireland. . in that case is the prohibition on doing this shipping still operating? thank you.

Expert:  TaxRobin replied 3 years ago.
Yes, the shipping would not be changed by any other service you offered.
Customer: replied 3 years ago.

so the customer has to pay the vat on a free gift? but if it's free we suppose he doesn't have to pay any vat. vat on 0% value is 0%, it isn't ?

Expert:  TaxRobin replied 3 years ago.
Thanks,
The customer is not going to pay VAT on a free service. I did not say that at all.
I said your shipping will not be changed by anything else you offer.
Customer: replied 3 years ago.

it seems you didn't understand the question. the service would be not free, as you wrongly wrote. free would be the good that we give as a gift to everybody who use our paid service.

 

I say, following what you have explained, that I offer this service:

 

"we ask to a question about the fruit juicer". that's the service that we offer.

it costs, for example, 30 euro + 23% irish vat.

 

for each customer that use this service (and pay for this service 30 euro+23%irish vat) we give a free gift for thanking you. the free gift is a fruit juicer that you receive from spain.

 

is in this case still operating the prohibition of doing that shipping of good (as a free gift) from spain to the customer in france?

 

 

Expert:  TaxRobin replied 3 years ago.
If the cost is attached to the service then the VAT would apply to the place where the service is given.
A gift only arises where no consideration is received for it by the supplier. However, if there is a requirement for the customer to pay a consideration in connection with the receipt of goods, even if the supplier describes part of that good as a "gift", or as being "free", (for example "ask a question and receive a free juicer/promotional item), it does not come within the terms of a gift for VAT purposes.
The shipping would not change as it is would not been seen as a gift.
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