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.
If you want to work in Europe or the UK, you need to register for your VAT number. But only if your turnover has already exceeded the threshold of £85,000. If not, you can still register, as long as you know if the goods are subject to VAT. After VAT registration, you will be assigned a number. You will become a full VAT-paying company owner when two conditions are met: when your financial turnover exceeds £85,000 or when you self-register for VAT with the tax authorities.
VAT registration begins on the HMRC website. To access online VAT services, you need to register for an account on HMRC's online services/government gateway.
Documents required include invoices/contracts for European sales/purchases over £85,000. The registration will require the following information:
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.
It is beneficial for Ukrainians to work with England, as it attracts investors from around the world who can build serious businesses within the kingdom. The key is understanding the market, the needs of the English and calculating the business model for any field, whether it's goods or pharmaceuticals. It's important to consider how the logistics for shipping goods from Ukraine to the UK will work to calculate the profit after all mandatory payments. VAT registration on the HMRC website is free. You can collect and submit the documents online yourself.
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.
If the company is registered for VAT, it must submit a declaration. For businesses, this is done quarterly (every 3 months), although monthly or annual submissions are also allowed. The VAT report in the UK includes:
If output tax exceeds input tax, you may apply for a tax refund from the Tax and Customs Service.
Tourists and non-residents of the UK can refund the VAT paid on goods:
The process of claiming VAT refunds in England for businesses is more complex. You can claim VAT on goods purchased or imported up to four years before your registration, if:
To claim VAT refunds for services acquired within 6 months before VAT registration:
Our specialists will help you with VAT registration. We will also provide all logistics services so that your Ukrainian business can operate and grow throughout the EU.
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