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This section explains in simple terms some of the issues surrounding trading internationally. The responses below relate to income and corporation taxes - information on VAT is available from the Customs & Excise web site. Some of the issues raised below are quite complex. You may wish to seek professional advice.
I am intending to trade electronically with people outside the UK, do I need to tell the Inland Revenue? Assuming that this is an extension of your existing business or a new business based in the UK the answer is no. You should maintain records in exactly the same way as you do for transactions with people in the UK. If, however, you are setting up a trading structure overseas to administer this part of your business there may by additional rules which you need to be aware of and you should contact your local tax office for more details. If I sell electronically to customers from overseas, will I have to pay tax in those countries? It is unlikely that simply selling goods electronically through a web site on a server located in the UK to customers in another country will make you liable to corporation or income tax in that country. But if you carry on any other activities in that other country you may have a taxable presence there. Some countries may take the view that a server located in that country creates a taxable presence in that country. You are advised to contact the tax authorities in the country to clarify the position. If I buy electronically from traders overseas, will I have to pay tax in those countries? It is unlikely that simply buying goods from another country will make you liable to corporation or income tax in that country. Are sales to businesses treated in the same way as sales to private individuals or other organisations? For corporation and income tax, sales to business and sales to private individuals or other organisations are treated the same. Is there any specific information that I should get from my international customers when trading electronically? You should keep sufficient information that will enable you to produce accounts and explain the transactions reflected in those accounts. Are there differences that I need to be aware of between trading with other European countries and trading outside Europe? For corporation and income tax purposes, there are no significant differences. Does it matter in what currency I deal with customers from overseas? If you are dealing with customers from overseas, you may wish to invoice, or you may be invoiced in, a different currency from the currency of your accounts. Invoicing, and receiving or making payments in currencies other than the currency of your accounts may give rise to exchange differences. These will normally need to be recognised for tax purposes. It may be worth getting a professional accountant's help to deal with any foreign exchange differences. What about the Euro? Does that affect me when I trade electronically overseas? The Euro is a foreign currency like any other foreign currency. So the normal rules apply as for any other foreign currency.
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