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  1. #1

    UK or US site revenues to Europe (mainland)


    We are a team who are about to start our ecommerce shop, primarily for -either- US or UK. Now we have a dilemma, as to which country to start with to make the startup as simple as possible.

    As we are based in Netherlands we would like to know about the taxation of sold products in UK versus US, when the owners are in Netherlands, Europe. Does anyone have input on this?

    We don't even know where to begin.. Our products are electronic (files) and only interesting to an these two English speaking countries.

    Thanks in advance,

  2. #2
    Join Date
    Dec 2006
    Look at the whole situation from taxation POV.

    Within the EU, there is a 20%~ VAT applied to most things sold. In the US, I think there is a sales tax (% depending on the state) for intra-state trade only. Purely from this perspective, US might seem a better place to do business -- internationally. Look at corporation tax. UK has 20-21%. US has 35%. So that's a cut you give away from your profit before distributing dividends.

    You might also want to look at the way the US and UK accept your returns and accounts and their statutory requirements. Definitely things to consider.

    Also, keep a close eye on forex. Most companies change with 2-3% commission (banks are way cheaper though). It makes a huge difference.

    I'm not an accountant, please correct me if I'm wrong.

  3. #3
    A US company incorporated in Delaware would be a good way to go about it. However if you also need a merchant account for the US company for sales then that won't work if the owners are in Netherlands.

  4. #4
    Join Date
    Apr 2009
    USA / UK
    It's usually easiest to form your business where you are located, at least at first.

    You'll find it's far easier to deal with only one countries tax system as opposed to having to pay a registered agent in an offshore location, having to file taxes in both the Netherlands and in the foreign jurisdiction where you form your business. And that's before we get into the hassle of foreign bank accounts so your foreign business can operate (in other words, plan on traveling to the country where you establish your business to take care of some things).

    Form your business locally. VAT rate in the Netherlands is 19% and you won't have to worry about collecting VAT until your sales exceed €104,369 anyway.

    Since you aren't physically exporting anything (presumably your electronic files will be downloaded and not shipped on cdroms), you won't need to worry about paying any kind of taxes in the UK or the US unless you establish a presence there.

    Long story short: don't worry about trying to evade taxation until you actually have a decent income

  5. #5
    you won't have to worry about collecting VAT until your sales exceed...
    Yes some online startups don't realize this they register for a vat number, then they charge the extra 20-25% on whatever they sell and have a disadvantage competing right upfront.

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