This is pretty complicated and I have been breaking my head to figure out a solution.
So, I created a UK company, with the plan to sell items (under 25$) bought on AliExpress in EU countries.
...and the nightmare begins...
Considering I am a non-VAT registered company -under the 85K pounds threshold-, I do not have to charge VAT -theoretically.
So, if a client from Greece for example, buys my product, should I not charge him with 24% VAT (local rate), or should I? I have found that I should charge local rates, but I need to double-check.
Now, purchasing items from China that cost under 25$ are not liable to VAT -theoretically.
But in the case where I DO have to charge local VAT rates when I deliver to EU countries, what happens to the tax I charged since I am a non-VAT registered company??
In the case that the client orders from me multiple cheap items that exceed the 25$ threshold and reach 100$, then EU charges VAT on the product import. In that case, if I am already charging local rates, it's all good? But again, what if I am a non-VAT registered company? I theoretically should not pay VAT yet I pay...
It is really confusing for me. Yet it should be simple as it is the essence of dropshipping, unless if after all, dropshipping is NOT for the EU but rather for the N.American market, in which case, I wish I had known this before adventuring into the business.
Thank you all -tax- experts!