Legal questions about my new dropshipping site

[Gerard]

Hi all, i' ve recently started my new dropshipping site. First of all let me make my complemanti to the creators of this plugin. My doubts are about taxes pay, i am situated in italy. I hope that maybe among you there is some Italian so maybe can provide me his experience, in any case whatever opinion and advice can be useful.

• The biggest concern relates to the payment of taxes as the IVA, and whether or not you must pay in order to avoid legal problems.
• The second is the creation of an LLC in the United States, if someone could explain to me what it is and what advantages would have to create it?

Tankyou to all for you advices

 

[destrovel]

I've done some research too for the Netherlands. Both being European Union, I think we have the same issue.

We would be subject to our own country's VAT and product return policies.
Thus, I should charge a 21% VAT on my products.
Any profit I make would be taxed as income from work (here 40 - 50%), or I could incorporate to get company tax (20-25%).

The way to avoid the Dutch tax rate would be by incorporating somewhere. That is, set up a company in a different country.

As far as I have read, the american LLC allows me in some states not to charge any sales tax (VAT), and has a different company tax rate.
Downside however is the initial fee; about $600.

Ofcourse, this is all the legal talk.
Same as with selling copyrighted products, you could also just take the risk and not incorporate and not report any taxes.
Being a financial professional in life, I would have to strongly advise against that

 

[Gerard]

Ok thanks for your advice. Now (I do not sell anything), but I can sell things. On your opinion What is the upper limit within which I have to pay taxes and become totally legal? And if you can help me learn when how to pay this fees and sell items legally?

Because my concern is that of the risk of incurring legal problems ... the case for some of you it never happened?

 

[otk]

I am not 100% sure but i guess the law is similar across Europe. If you sell to other countries then Your own country (for example if You are situated in NL and don't sell to NL), then the business is not located (not making any turnover) in Your country, therefore You dont have to pay VAT.

 

[Anthony Phillips]

If your sales are within the EU and you are registered for VAT then you will charge vat on your sales , and claim vat from your costs.

When a sale is outside of the EU it is considered 'Out of scope' of VAT and therefore VAT not required to be paid on that sale.

The level of sales dictates whether you need to be registered (or charge) VAT, for example in the UK the threshold is around £70k, so if your sales are less than £70k a year, you don't need to register or pay vat until then.

I suspect your sales are not yet at that threshold, so you don't have to worry about paying vat on the sales right now.

You do however still have to keep accounts and pay taxes on your profits.

Hope that helps.

 

[otk]

If your sales are within the EU and you are registered for VAT then you will charge vat on your sales , and claim vat from your costs.

When a sale is outside of the EU it is considered 'Out of scope' of VAT and therefore VAT not required to be paid on that sale.

The level of sales dictates whether you need to be registered (or charge) VAT, for example in the UK the threshold is around £70k, so if your sales are less than £70k a year, you don't need to register or pay vat until then.

I suspect your sales are not yet at that threshold, so you don't have to worry about paying vat on the sales right now.

You do however still have to keep accounts and pay taxes on your profits.

Hope that helps.

The treshold considers sales into that country. So if You are not Yet registered for VAT, then there's no worry. You don't have to register when You go over the tresold if the sales are not into Your country.

 

[Gerard]

Ok for now sales are well below the threshold, rather they are zero ... anyway so in theory if I sell in my state I am exempt from paying VAT, and I do not even need to declare my receipts to anyone right?

It should then disable the spedizone in European countries?

However I definitely keep records of everything.

 

[otk]

Ok for now sales are well below the threshold, rather they are zero ... anyway so in theory if I sell in my state I am exempt from paying VAT, and I do not even need to declare my receipts to anyone right?

It should then disable the spedizone in European countries?

However I definitely keep records of everything.

I consoluted with local tax office, i am in Europe and conclusion is, that if i don't sell to my country, then im free from paying VAT. (and i am not VAT registered). I suggest You to call Your local tax office and explain Your business model (clients not from Your country, goods delivered from China directly to customer) and see what they tell You.

 

[Gerard]

I consoluted with local tax office, i am in Europe and conclusion is, that if i don't sell to my country, then im free from paying VAT. (and i am not VAT registered). I suggest You to call Your local tax office and explain Your business model (clients not from Your country, goods delivered from China directly to customer) and see what they tell You.

But you don't sell only in your country? or in all Europe?

 

[otk]

But you don't sell only in your country? or in all Europe?

I don't sell only in my country. I am not sure but MAYBE if i hit the VAT limit in any other country, i should register myself there for VAT number (ask from Your local tax office).

 

[Gerard]

Yes sure in those days i will contact my postal office to ask information

 

[destrovel]

Just found out something; remember; this is Dutch law, but it could be similar in other European countries as well.

As a small entrepreneur who is not incorporated, we can request a VAT-exemption when the total VAT due over a full year would be less than €1130.
That would mean a revenue of approx €5.380.

 

[SuperAgora]

Ciao Gerardo,

Perhaps some of these links might help you get started.

How can I comply with VAT obligations (Article in Italian)?
(Come conformarsi agli obblighi IVA)
https://ec.europa.eu/growth/tools-d...ome-conformarsi-agli-obblighi-iva?language=it

European Union & Taxation
https://europa.eu/european-union/topics/taxation_en

VAT rules and rates
http://europa.eu/youreurope/business/vat-customs/buy-sell/index_en.htm

VIES VAT number validation
http://ec.europa.eu/taxation_customs/vies/

I hope this helps
Spero che passi una bella giornata
Anastasios