Hi all,

A newbie to hosting here (I'm a designer) and I just set up my own agency in London. Now here's the question:

My business is going to apply for VAT registration, which means that I'll be charging VAT for all services in the UK/EU. However, when I start the hosting branch (initially as a reseller), all transactions will be handled through the Internet and I cannot possibly charge VAT can I? (I mean, for one thing, this would make my prices much higher than hosting companies in the US.) And if I'm reselling from a US company (eg. MCHost) ...

I guess I just don't know how taxes play into all this and would love any advice from anyone more informed than me.

Thanks,
Aral :)

Do you actually need to register for VAT yet? (Just checking, but if you're not earning more than £55,000 a year it's not necessary, and certainly not worth it)

You will have to charge VAT to everyone in Europe, but not the US - but I *think* that electronic services might be zero-rated, so no VAT is payable - I'm not at all sure though.

Hi ubergeek,

The reason I'm registering for VAT is for my design clients. I'm mostly targetting large firms and other businesses so it helps to be in the "VAT loop" so to speak. And plus I have quite an initial hardware outlay, some of which I bought in the UK, that I'd like to reclaim VAT on.

I'll definitely research the 0 VAT for Internet issue you mentioned though. (Although I was looking at the DonHost pages and they mention that VAT is included in their prices and make distinction on where you are based.) Hmm... I guess I may have to narrow my audience to the UK/EU since it would be hard to stay competitive with the US...

Thanks again, Aral :)

Like I said, I may be wrong (probably am :D) but it's worth checking.

You need to charge VAT for every customer in the EU. Webhosting or electrontic services are not exempt.
You do not, however, have to charge VAT for any customer outside the EU, so your US customers don't have to pay VAT.

Thanks Gernot... nothing like government to make things more difficult :)

You don't have to charge VAT for clients from US, Brazil or any other country outside EU.

Hi,

Do a search on the forum, there was a discussion on this not so long back.....i am feeling a bit too lazy to find you the link:eek3:

Thanks SuperDon, will do :)

I believe you only have to pay VAT only if your income is over £4.5k a year

VAT threshhold is £54k as we were discussing this the other week. There is a loop-hole (but it's being closed) that AOL use to avoid charging VAT on services provided to people in the EU, but like I say, it's being closed and you're very unlikely to get classified in the right business category now anyway to get in on it.

Typhoon, you're thinking of Income Tax :)

We got advice from HMC&E about this, and based on that we only charge VAT to UK customers (we are based in the UK). They say that if you are selling business services to the EU then you may assume that the customer is liable for VAT, whether or not the customer is VAT registered.

If you are selling goods or services meant for personal use to the EU then you should charge VAT. Outside of the EU you don't charge VAT at all.

Originally posted by Zolotek
We got advice from HMC&E about this, and based on that we only charge VAT to UK customers (we are based in the UK). They say that if you are selling business services to the EU then you may assume that the customer is liable for VAT, whether or not the customer is VAT registered.

If you are selling goods or services meant for personal use to the EU then you should charge VAT. Outside of the EU you don't charge VAT at all.

Pretty much work for word what I would have said:)

BTW: VAT man hates the fact you dont have to pay him any VAT from US!! ha ha ha!