The Ukrainian tax system is flexible and simple. For this, we can separately thank our digitalized society and its developments such as Diya. But European countries treat tax issues much more strictly and more controlled. As the Europeans themselves say: "We don't pay tax only for the air we breathe."
That is why today we will talk about taxes and tell you what VAT is and how it affects the final profit after receiving the cargo. Read the article to find out:
VAT (Value Added Tax) is a tax on added value, which is paid in full by the recipient of the cargo. The main feature is that this tax is paid before the product is purchased. Because the seller pays part of the tax to the country in which he buys the service or product. Because of this, the amount of tax received by the seller is paid to the state budget in full. And after that, the amount of VAT is deducted.
It is important that VAT on goods in Europe is registered at the request of sellers. But if the seller company has reached the financial turnover determined by the regulation, then VAT must be registered. The VAT rate in Great Britain is 20% and the following groups of goods are subject to value added tax:
At the same time, although tax accounting in the kingdom is strict and almost everything is subject to it, there are several exceptions when the amount of tax is significantly reduced. For example, the cheaper group (they pay 5% VAT) included:
Note: The percentage of VAT in some European countries: Poland — 23%, Germany — 19%, Great Britain — 20% of the invoice value.
In 2006, the EU and Great Britain adopted a directive on a common system of value added tax. But each country has the right to decide for itself the amount of VAT and on which goods it wants to set it. Speaking of Ukraine and the EU, value added tax is charged on 4 transactions:
It is worth mentioning here the types of deals, as they affect your overall financial turnover. There are 2 types of agreements:
+ B2B (business to business) — when 2 taxable persons participate in a financial transaction, where the buyer receives a product or service for commercial purposes.
+ B2C (business to consumer) — when the seller pays VAT, but the buyer does not.
It is important that the deferred VAT system only applies to Great Britain.
Most Ukrainians work according to the first type, because it is much more profitable than paying for a client every time. Although a lot depends on your chosen field of business. In addition to the price of the product, VAT should also be taken into account so that you do not lose anything when selling the product.
Only health care, social security and education services are exempt from paying the tax. All other non-state institutions must pay VAT. If you avoid taxes, you may encounter large fines and administrative offenses.
If you want to work in Europe or in the UK, you need to register your VAT number. But only if the turnover has already exceeded the plan of 85,000 dollars. If not, it is also possible, the main thing is to know whether the goods are subject to added tax accounting. After VAT registration, you will be assigned a number. And you will become the full owner of a company that is a VAT payer when your financial turnover exceeds the amount of 85,000 or the date when you independently registered VAT in the tax office.
It is beneficial for Ukrainians to work with England, as it attracts investors from all over the world who can build a serious business in the middle of the kingdom. The main thing is to understand the market, the needs of the English people and calculate the business model of any field, whether it is a commodity or a pharmaceutical company.
Yes, if you work in business + B2C (business to consumer) — when the seller pays VAT and the buyer does not. Therefore, it is very important to include all tax amounts in the price of your product in order not to lose, but to earn and scale your company.
When your cargo is cleared by a broker, he can pay VAT for you, because he has money here and now, this reduces delays at customs, but he takes a commission for such a service, in some European countries it is fixed, in some - not. In Britain, for example, 45 pounds for an invoice value of up to 10,000 pounds, if the invoice value is greater than 2%.
Mini portals Mini One-Stop-Shops (MOSS) will help you in this. Quarterly reports can be filled out below. But to avoid the hassle of declarations, the procedure for distributing VAT with other European countries and other problems, you can use resellers. These are services that conduct transactions and independently calculate VAT with local rates. Here is a list of platforms shared by many sources to help you pay VAT seamlessly and securely:
Our specialists will help you understand the issue of VAT registration. And we will provide all logistics services so that Ukrainian business, your company works and develops throughout the EU.
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