Dropshipping
Dropshipping
Question:
Hello,
I plan to start an activity mainly related to drop-shipping with goods from suppliers in China and end customers in the European Union, including Bulgaria. For starters, I will use the Ebay and Amazon platforms.
Imagine the following scheme:
A customer from England or another EU Member State places an order from my store on the Amazon platform, pays for it, and then I place an order from a supplier in China, indicating the product to be shipped to a customer in England. Classic dropshipping. If the value of the product is subject to customs clearance then VAT and Duty will be paid by the end customer and the same will be paid at his expense.
Now the questions are:
1. My company is not registered under VAT. Is it obligatory to register under the VAT Act and if so when?
It should be borne in mind that I will receive invoices from Amazon and Ebay for the fees they provide for the use of the platforms.
2. I will receive an invoice from the supplier in China for the product value and the shipping cost to the end customer. I will not pay VAT and Duty as it will be released in the buyer's country. In this case, what invoice should I give to the buyer?
Thanks!
Answer:
Hello,
1. Once your company receives services from EU companies, you are subject to mandatory VAT registration. The registration deadline is 7 days before you receive the first service from an EU company on the basis of Article 97a para 1 of the VAT Act. In this case, you are obliged to charge 20% VAT on the value of the services received. In order to be entitled to a tax credit for this self-assessed VAT, as well as for any other VAT paid on invoices from Bulgarian suppliers, it is better before you start the activity to make a voluntary registration under VAT under Article 100 para 1 of the same .
2. If you receive an invoice, it means that you buy and then sell. The idea of dropshipping is to get a reward for the service you provide - to connect the customer and the supplier of a particular good. The invoice from China should not be in your name but the name of the final recipient. You must issue an invoice to the final recipient for the brokerage commission.
We hope we have been helpful.
Greetings!
