Question Regarding VAT From Income Outside EU

[jester]

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Hi

I have a question regarding VAT liability on income from outside the EU. I am based in the UK and have an AM business which is a Limited Company. It looks like my turnover could eventually hit £64000 which would force me to become VAT registered. I receive my income from numerous Networks, Adsense and in-house affiliate programs.

From what I understand, for EU based Networks, e.g CJ UK you can simply give them your VAT number and they will add it to your invoice each month. Is this correct?

What I am confused about, however, is income that comes from commissions from non-EU companies. What happens to Networks or companies outside the EU VAT, e.g Shareasale? Would they be out of the scope of VAT since they are based in the US? I have also heard that Adsense income would not be liable for VAT. Is this correct?

I understand that I will have to pay income tax on all forms of revenue. However, what I dont want to happen is to be paid my commissions excluding VAT from the companies outside the EU, but still be liable for VAT, leaving me 17.5% out of pocket.

Many Thanks

Jester

[hrbs]

What I am confused about, however, is income that comes from commissions from non-EU companies. What happens to Networks or companies outside the EU VAT, e.g Shareasale? Would they be out of the scope of VAT since they are based in the US? I have also heard that Adsense income would not be liable for VAT. Is this correct?

Hi

Both of these sources of income are outside UK/EU and therefore outside the scope of UK/EC VAT and are not taken into account when calculating your VATable supplies for the VAT threshold test.

Adwords expenditure must be included in the VAT threshold calculation due to the reverse charge rules (for more info see my articles at
Adwords And Your VAT ReturnBusiness and accounting tips from HRBS Accountants
and VAT for affiliate marketeersBusiness and accounting tips from HRBS Accountants .

Regards

Keith
Fixed Fee Accountants and Tax, VAT, Payroll Specialists providing proactive, professional service to small businesses - HRBSaccountants.com