The information in this article is relevant to UK customers only. If you are looking for information about taxes in North America, please check out the Manage Tax Rates section of this article.
Overview
We support both VAT and non-VAT registered businesses as users of the GotPhoto system. In this article, we will look at each case separately.
Businesses below a certain turnover threshold are not required to register for VAT in the UK. If your business is not VAT registered, you will not enter a tax number in the account settings and will more than likely set your tax rate at 0%.
End Customers will not see nor pay your business VAT in the shopping cart.
As a non-VAT registered business, everything that is billed to you via GotPhoto is subject to UK VAT. This includes GotPhoto service fees, payment fees, monthly fees, production fees, or postage costs.
Postage: To maintain postage as a neutral cost for non-VAT registered businesses, we include the gross price for shipping in the shopping cart when charging parents. Why is this necessary? When you pay the shipping fee to us, VAT is applied to this charge. Therefore, to ensure that the VAT costs are covered by your end customers, parents are charged the total cost of postage, including VAT, i.e., the gross price.
This charge is not a VAT cost; it is presented as postage on the parent's invoice and is treated as a single gross price, similar to any other products purchased.
Example:
A parent purchases a 8x6 print for £10 and opts for home delivery, which costs £3.95. A third-party lab carries out the fulfillment.
For instance, the cost of the print to you as a business is £0.20 (plus VAT, totaling £0.24), and the postage costs £3.29 (plus VAT, totaling £3.95).
The parent is charged the gross amount for postage, i.e., the full £3.95. This charge is simply listed as postage on the parent's invoice, without any specific mention of VAT. It represents the total amount you charge the parent.
Total lab and postage cost: £0.24 (print cost with VAT) + £3.95 (postage) = £4.19.
Businesses exceeding a certain turnover threshold must register for VAT in the UK.
VAT-registered businesses should enter their VAT number in their GotPhoto account, ensuring to prefix the number with "GB" for accurate system recognition.
Subsequently, the appropriate VAT rate (typically 20%) can be entered under your Sales Tax Settings.
VAT will be transparently itemized for parents in the shopping cart, on their invoices, and in your sales statistics.
For VAT-registered businesses, charges from GotPhoto, including service fees, payment fees, monthly fees, production costs, or postage costs, are not subject to VAT due to the reverse-charge mechanism.
The VAT reverse-charge mechanism is a tax regulation that shifts the responsibility of VAT payment from the seller to the buyer. In this arrangement, the seller does not charge VAT on the sale of goods or services. Instead, the buyer, who must be VAT-registered, accounts for the VAT on their purchase as if they were the seller and simultaneously claims a VAT deduction on the same transaction. This process is designed to simplify VAT reporting and aims to prevent VAT fraud by ensuring the buyer directly accounts for and pays the tax to the government. This results in a neutral impact on the buyer's VAT return when fully deductible.
Items purchased from your shop are subject to the VAT rate you configure in GotPhoto, commonly set at 20%.
With show gross pricing enabled in your settings (a common practice), the prices you establish in your price profiles will incorporate VAT. These are the prices displayed and charged to buyers in your online shop.
If you are a VAT-exempt business, tick the I am tax exempt box under the Sales Tax Settings tab. You will be asked to provide documentation later on.
If you would like to provide your customers with some additional information on your status, you can add this in the Additional notes on the invoice text box within the Advanced invoice settings tab:
Make sure to click Save information when finished!
To determine your taxable income, use the order reconciliation report, which is located under the Statistics tab.
This report is designed to help you reconcile your orders and any related payments and fees. You have the option to filter the data by job, or, you can download the entire dataset (in this case, don't select any job). Please note that this report is currently in beta and may be further adjusted if needed.
- Find end-customer orders/invoices in your account with the VAT outlined here.
- Find your GotPhoto Invoices in your account here.
- Set up VAT in your account here.
- GotPhoto's Corporate Address:
GotPhoto is a service of:
Fotografen Online Service GmbH
Hausvogteiplatz 12
10117 Berlin, Germany - UK VAT ID: GB209246809
GotPhoto is not a tax advisory service and any info provided is general and generic in nature. Please consult a professional accountant to gain specific advice for your business.
The Takeaway
For UK businesses using GotPhoto, non-VAT registered users should set their tax rate to 0%, and all charges include UK VAT. VAT-registered businesses must enter their VAT number and set appropriate tax rates, with VAT details clearly displayed to customers. Use GotPhoto's tools to manage taxes efficiently, but consult a professional for specific advice.UK fees