Online store selling abroad

  HighTower 23:39 24 Sep 2007

I've built an online store for a collection of different art and craft based users who are members of a larger collective which helps them develop their businesses through European funding.

There are around 150 individuals involved, each with their own content managed mini-site and shop but under a single website brand (that of the collective). Each user has their own shopping cart and any payments are made through their own PayPal business account as specified in their profile in the Content Management System.

A couple of the users have said that they wish to start trading with customers in the US and Australia but I'm aware that there may be issues to look at here.

The remit of the site was always initially to be UK based, but if members decide to market to an international audience can anyone offer any advice, specifically from a taxation or customs and excise perspective?

  HighTower 12:37 25 Sep 2007

The vast majority of traders are not VAT registered, but the terms and conditions of the site make it very clear that the contract is with the vendor, not the collective, and each vendor has their own terms and conditions etc on their own shop.

At no time does any cash come to the collective, it all goes direct to the individual vendor via their own PayPal arrangement. The collective is a not for profit organisation.

If a vendor is VAT registered then the prices on their shop display that the price is inclusive of VAT. If they are not then it doesn't!

I thought of the 'Contact Us' idea for overseas orders, maybe using PayPal email invoices as an option?

What about customs and excise in the country that the vendor delivers to? Would the purchaser have to declare the goods and pay local taxes? Is that the customers responsibility?

Thanks for your input. Much appreciated.

  Forum Editor 19:29 25 Sep 2007

about international trading via a website - there are pitfalls for the unwary.

Any online business that sells to individuals or businesses located within the EU must comply with EU VAT regulations. broadly speaking this means that VAT must be charged at the rate prevailing in the destination country, OR in the country which a non-EU based business has selected for the purposes of its VAT accountability. This means that a company in say, America, must either charge EU residents VAT at their local rate, or specify any EU country, and charge the rate applicable in that country to all EU residents. The company then accounts to the specified country's Revenue authority for all VAT charged. This helps, because foreign countries can select an EU country with a low rate of VAT.

Frankly this isn't the place for a long dissertation on the complexities of exporting goods or services to foreign countries, and if your traders aren't registered for VAT they won't have to worry about that aspect of things.

What they should concentrate on are questions such as do they understand that overseas customers will expect rapid delivery of their orders, and have they thought about how they might handle the matter of returned orders?

  HighTower 00:38 26 Sep 2007

I think that for now at least I'll advise that they stick to their UK markets. Sounds like the whole thing is a little risky and I certainly don't want to be held responsible for any misunderstandings.

Thanks to all for their input.

  HighTower 12:50 26 Sep 2007

So are you saying that if a web vendor wanted to sell to Australia for example they would have to charge the customer the local tax - GST I believe it's called over there, and I think that it's around 10%.

And if they did that they then have to register for GST in Australia so they can send in their return at the end of the year? That's assuming that they are VAT registered.

Just want to get some basics clear in my head. I'll offer them some basic food for thought and if they want to take it further then I think that's when they speak to their tax advisor - as it's clearly something I'm simply not knowledgable enough on.

It's kind of been decided already though that the Buy Online facility will extend only to the UK, any additional international trading will be carried out independently by the vendor.

  Forum Editor 18:56 26 Sep 2007

with a declared value of one thousand Australian dollars or less are released duty and tax free by their Customs authority. However, where there are multiple packages to the same addressee from a single point of origin that arrive at about the same time, then the value of all packages will be combined for duty and tax assessment purposes. Any due amounts are payable by the recipient.

Goods with a value of one thousand Australian dollars or less arriving by courier require the completion of a Self Assessed Clearance (SAC) declaration before clearance from Customs control. SAC declarations can only be lodged on-line in advance, and all the major express couriers will provide this service to regular clients.

  Forum Editor 19:08 26 Sep 2007

I omitted to answer your GST registration question.

A foreign trader does not have to register for GST purposes until or unless his/her sales into Australia exceed fifty thousand Australian dollars a year. You may voluntarily register if your turnover is below that limit.

I imagine that your traders would mainly be doing what are called CIF (Cost, Insurance and Freight). deliveries to Australian customers, and this means that the recipient is liable for any payments due on arrival of the goods.

  HighTower 19:50 26 Sep 2007

I'm astounded by your knowledge of all this! Is there anything you don't know?

Thank you for your very comprehensive response.

  Forum Editor 23:38 26 Sep 2007

and my clients there are in the travel business - I've acquired a bit of information about the local taxation structure as a consequence of working with them.

  HighTower 23:47 26 Sep 2007

I spent a year in Australia in my younger years travelling around and working - so I tended to try to avoid the local taxation system!

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