If we supply a UK customer on an FOB China basis, so invoicing them in dollars and them collecting product straight from the China factory, what are the VAT implications when we invoice them and how do we reflect that when setting them up in sage?
We will also be supplying them ex UK, so I assume we set up a dollar account and sterling account?
I presume that we will need to put it through intrastat as well?
I don’t know if are still waiting for an answer to these questions.
1/ FOB means you will have responsibility to deliver the goods to the vessel, your customer will not be responsible for collecting from the Factory, that would likely be EXW.
2/ You want to make sure that your invoices ( including your profit) travel with the goods otherwise your customer will not only know your factory but also the price you are buying the goods for.
3/ Since you are selling the goods FOB, who will be in charge of the Bill of Lading and therefore the goods. I don’t know what credit terms you are giving your customer but you need to protect yourself.
4/ You do not need to fill in intrastat information as that is only for sales you make to EU (non-UK) countries.
5/ You can set up 2 accounts, one in dollars for your FOB sales zero VAT and one in Sterling for you EX-UK deliveries. These Ex-UK sales will need to be invoiced plus VAT.
Feel free to get in touch if you have any other questions
Steven Hope – Chinese eCommerce Specialist