I am starting a UK-based adult webcam business with performing girls from all over the EU. I will be using zombaio.com as the card processor, have zombaio pay the income (minus their processing fees) to my bank account in the UK, and then disburse the performers cut via bank transfer to their home countries. My question is, how do I comply with the cross border VAT requirements? I have to pay 20% VAT to the UK tax man from the income, but how do I claim back the VAT from the performer (for supplying the performance)? Not all of them will have a VAT number or equivalent, and it will be a big administrative issue to reclaim all of the VAT from all of the performers from all of the different jurisdictions (I don't want to spend all day phoning the tax offices in Bulgaria, Slovenia and Latvia to demand some tax back.) I want to go 50-50 with performers, but if I have to swallow the whole 20% VAT, then the profit margins start to look not so attractive. I am seriously considering opening a business/bank account in Gibraltar, where VAT is not an issue, but is still within the EU (a requirement from zombaio.com). How would you guys structure this? Would appreciate any thoughts.
You may be better off looking at the Flat Rate VAT scheme run by HMRC; you do not recover VAT on your purchases but only have to pay a lower percentage to HMRC (but still charge your customers the standard rate ie 20%) The rate you pay HMRC varies depending on your line of business but is generally 7-14% with an additional 1% discount in year 1 of registration. See http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm If you were looking at doing the traditional route of VAT then you would need to know which of your performers are VAT (or equiv) registered (I suspect few of them will be). It then gets messy and your best speaking to an accountant but some information can be found http://www.hmrc.gov.uk/vat/managing/international/imports/importing.htm
It is very difficult to get VAT number due to all cheating with VAT and without it the VAT number you can not charge it. I think there is a limit of 75000 before you need to register.
It is very easy to get a VAT number, never had any problems with any of our businesses. You must register if your projected annual revenue (not profit) will exceed £75,000 on a rolling basis. Below this amount revenue it is up to you if you want to. The only reasons why you'd want to register is if: 1) You mainly sell to those that are also VAT registered 2) You sell a product/ service that is 0 rated (which is different from exempt) If you dont fall into either of the above categories it is generally a bad idea to register before you legally must unless your intending to invest massively in capital assets, will therefore being making a loss for a year or two but then will exceed the turnover limit