Hi ,
I am currently in the process of setting up an e commerce store to sell a Christmas product. My sales revenue if going well ( a big if ) will prob be under 25k. The VAT threshold is €75000 for persons supplying goods . If I don't register for VAT on the basis that I wont exceed that threshold does that mean that I have wont have to apply VAT as part of the product price and no vat payment is due to revenue on the sales proceeds.
It also means that the VAT you pay your suppliers cannot be recouped.
VAT is a tax on the person at the end-of-the-line and is passed along from manufacturer-wholesaler-retailer-customer with only the customer paying the VAT in the end. All others are cash-neutral.
If the OP is selling to retail customers, not being registered for VAT means s/he gets to keep €100 out of €100 sales (before costs obviously), if they were registered they would have to pay €13 of that €100 in VAT.
In your example in the real-world, if selling to retailers, the OP would increase his price to cover the VAT and his cusomers (retailers, so likely VAT registered themselves) would know how to reclaim the VAT themselves i.e. the increase in total price charged to the retailers would not equate to an increase in costs for the retailers (and the OP could then also in this case, keep €100.
What more is there to say
Quite simply, that if he is selling to retailers who don't care if he charges EUR100 without VAT (ie not registered) or EUR123 with VAT (ie VAT registered), then he should register if he is paying VAT on his expenses or paying VAT on the goods he is selling onwards, because then he can claim that VAT back.
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