We really need some help/advice please…
We have a UK Ltd business and are employed by it in France - so we pay taxes and cotisations here.
Our problem at the moment relates to import taxes/VAT
We have people in the uk who manufacture components. These are sent to us in France to QC, pack and return to the office in the UK for distribution.
We have hit a brick wall in finding out how to avoid taxes in AND out of France, considering that no sales have been made either way and they’re only coming over for us to undertake our work on them.
We aren’t UK vat registered as we don’t earn enough.
We aren’t TVA registered as no sales are made via France.
I’ve asked Tax “experts” and they don’t know either!
If anyone can shed some light on this I’d be incredibly grateful!
If we do have to pay both ways, will it be import duty or VAT?
Will it be on the actual components costs to France and then the to UK?
The wholesale value back to the uk or the selling price?
We sell from the office in the uk and everything is posted from there so there will obviously be a vat/import cost to all of the non UK customers and we understand that. That’s not the issue here.
It’s on the movement between the uk and the French employees that we are concerned about.
We really need some help/advice please…
You could carry out the import/export using an ATA Carnet. You will avoid VAT/TVA and duty but the carnet isn’t cheap. We pay typically £300-£1200 per carnet.
We usually receive £200-300 of components and then send the same components back but in the individual boxes they’re sold/dispatched in.
Will the taxes be payable on component cost or retail value?
As they won’t have been sold in either direction, will that mean vat/tva isn’t payable?
Perhaps just the import duty?
This is just so incredibly complicated with so little information on this sort of situation!
A carnet would avoid the need to pay import and export duty but is going to cost more than the cost of the goods. Here’s a link to information about the carnet system.
You’ll see that there is a base cost of £360, plus you’ll need to pay a bond related to the value of the goods. This will be returned some time after the goods have been re-imported.
I’ve just noticed that the page has not yet been updated to include eu countries.
It is, of course, possible that the “Brexit Deal” allows continued tariff-free import and export of your class of goods - I hope that that is the case.
I think you need to talk to an expert. The London Chamber of Commerce (as in my link above) would be a good place to start - I’ve always found them to be very helpful.
It is possible that you might find that Brexit has made your business uneconomic. Sorry. I’ve been reading of other small businesses (in the UK) who have found that their business model no longer works economically. And specialist business like seed potatoes who can no longer supply EU orders.
Couldn’t you transfer the whole business to France? ie get components made and packed here, and then send then where-ever?
Sorry that I don’t have all the details and links but the UK used to have a system for temporary import (things coming into a repair shop that supported international customers for re-work and shipping back out). I recall it worked through a VAT Deferment Account. The import was made, value declared but the account didn’t need to be settled for 30/60/90 days and if you can show re-export back to source (AWBs and packing lists etc) within the time limit, then that temporary import is scrubbed clean from the rolling liability.
I would expect that France has a similar option although I guess it means being VAT registered as a pre-requisite but it should mean just marrying the ‘imports’ to the ‘exports’ to show no net import.
It might be that you’d need an EORI number (derived from VAT/TVA number).
Hope this helps and apologies for not having all the answers.
That sounds a neat solution for VAT but would it help if the item(s) were dutiable?
Warning - massive oversimplification ahead:
If both sides are VAT registered then it is all B2B and no VAT will be chargeable - in fact, as Karen mentioned above as there is no actual sale it probably is not chargeable anyway.
I must admit I find the business model slightly odd for small volumes of work since it seems to add overheads even if the UK were to have remained in the EU.
I think you are going to need more specialist advice than SF can offer.
If Karen is involved with the business that I think she is, and reading her description, it would make more sense to keep everything in the UK.
I’m so curious
No mystery - a quick google or two will find her, but as Karen hasn’t posted any links I was being polite and not doing so myself. I might be wrong anyway
The business is a uk business and probably 70% of customers are uk. The husband is going to look into having some of components manufactured in Europe as a possible solution.
Didn’t know I was on google! Off to check now!
No step away from the keyboard! SO scary doing it how much information people can find out about you.
It’s hard to have in internet presence without Google being able to track you down - but then, you might not be that Karen Stanning
I am a director of two small businesses. I have to work from home as we need to also care full time for our disabled 19 year old.
I predominantly QC the components as it’s vital that every piece is correct to 1/100th mm and my ocd helps with that task.
It was obviously much easier when we lived in the uk and my husband manufactured everything and I finished/packaged them.
We only moved to France in oct 2019 and had been sending 1 box back and forth each month. It had been working very well for us.
But import duties will make things difficult.
Thanks to various links people have sent me, there does seem to be a scheme where the products can come over and be returned within a set time frame. This is definitely workable and is on my list of jobs for next week. (We just moved house 8 days ago and I’m currently wading my way through paperwork and jobs for that too!
You sound SO busy I really hope you can find a solution that works and you can keep your business running successfully.
My recommendation is:
a) register for VAT in both UK and France - a pain, but you will at least be able to claim back VAT on all your company expenses - you can do this even if you do not meet the VAT threshold. If you are not VAT registered, I don’t think you can avoid having to pay all VAT due, both into France and back into UK.
b) enquire with your banks, both UK and France, about Duty Deferment Bonds - with this you can avoid paying up front VAT both for your French imports from UK and also for your UK imports from France. The amount of bond you will need depends on your level of imports into UK and France - for you it would not seem you need more than Euros 2,000 for the bond. The banks will ask you to pay interest for these bonds - we used to have a bond for £60k which cost around 5%, so not too bad. There will be the inevitable bank charges to set them up . DDB covers both VAT and any tariff payment due, and as an earlier reply says, allows you to avoid paying up front for items you import and expect to export within a couple of months.
c) for each shipment you will have to do a customs entry (cost around £30 or so per shipment), and provide commercial invoices for the goods. You will need shipping agents to do this for you. They will also be able to help you with both French and UK customs procedures and advice generally. In France you are lucky because there is a well established and usually well run network of chambers of commerce, there to help you with all matters related to import and export. In UK there are chambers, but they are not statutory. There are rules of origin, but provided over 50% of your product is sourced in UK or EU, it will not mean problems with tariffs.
d) tax people will not be able to help much I’m afraid - your best bet is go the chambers of commerce and also talk to shipping agents. They know all about it.
e) Good luck!