Tax for Basket with Coupon containing two different VAT rates
The vendor needs to do this using apportionment, according to the VAT rules for mixed supplies: If you make mixed supplies and the individual supplies are not liable to VAT   at the same rate then you need to work out the tax value of   each supply in order to calculate how much tax is due. If the tax   value is based on the total price you charge (see paragraph 7.3) you   do this by splitting that price between the supplies. This is called   an apportionment ... There is no special method of apportionment ... However, your calculations must be fair and you must be able to justify them. It is usually best to use one of the methods shown in section 32. The section 32 referred to really relates to apportioning use between business and non-business purposes, but it implies that splitting up the total price in proportion to the original prices would probably be fair. So in your example the vendor might split the £5 discount equally between the spoon and the carrycot as they had the same gross cost, and pay VAT as if each had cost £7.50 gross. The vendor could also do it in proportion to their net (pre-VAT) prices and thus apportion a bit more of the discount to the carrycot than the spoon, but as this would lead to them paying slightly more tax overall they probably wouldn't choose to. However, none of this is likely to be too relevant to a consumer, since in the UK prices must be presented as the gross (VAT-inclusive) amounts and so the discounts will also apply to those amounts. It will of course affect how much of the purchase price the vendor ends up paying on to the government and thus might indirectly affect what discounts the vendor is willing to offer.
Not doing this would defeat the entire purpose of a VAT. The reason for a VAT rather than a simple sales tax is that it's harder to evade. Having a simple sales tax with the type of rates that VAT taxes typically are is unworkable because evasion is too easy. Imagine I'm a retailer. I buy products from a wholesaler and sell them to consumers. With a sales tax, if I don't charge the customer sales tax, the customer is happy and I don't care (assuming I don't get caught). And if I keep the sales tax but don't report the sale, I make a lot of money. Now, imagine a VAT. If I don't charge the customer the VAT, I lose money since I paid the VAT on the wholesale products. And if I don't report the sale, how do I claim my VAT refund? "Regarding vehicle property tax in Virgina. The big difference is that business vehicles don't get a tax break: Under Virginia law -- the Personal Property Tax Relief Act of 1998   (PPTRA, also known as the ""No Car Tax"" legislation) -- the State   planned to subsidize 100% of the taxes on personal use vehicle   assessments below $20,000 by the year 2002. In passing this law, the   State effectively pledged state revenue to pay local governments   throughout the Commonwealth a subsidy in lieu of personal property   taxes that local governments would have otherwise collected directly   from taxpayers. At present, the State pays approximately 62% of the   bill, and the taxpayer pays the remaining 38%. These rates are subject   to change annually. The taxpayer must pay the full amount of taxes on   any vehicle assessment that exceeds $20,000. Only personal use   vehicles qualify for PPTRA. If that vehicle is worth 20K then a business will pay 4.57% of 20,000, but an individual will pay 4.57% of 7,600. A difference of $566 per year." There is no clear answer, it might be or not be. Depends a lot on your situation. 1)Yes it is taxable but as Italy has a double taxation agreement with UK, you might not have to pay. You can get a detailed guidance on the HMRC website. 2) Apply here for a certificate of residence  3)You can only claim back if Italy taxes you more than UK would. If it is less than you will have to pay the remaining portion to HMRC. You do this in the self assessment form/tax return/call up HMRC. 4)Tell the truth, explain your whole scenario and don't withheld relevant information assuming you may lower you tax by doing so. ESPP tax treatment is complicated.  If you received a discount on the purchase of your stock, that discount is taxable as ordinary income when you sell the stock.  Any profit about the market value when the stock was purchased is taxed based upon the holding period of the stock. If you have held the stock less than a year, the profit is taxed at your marginal tax rate (ie taxed as ordinary income). If the stock is held for more than a year, it is taxed at a special capital gains tax rate, which ranges from 0-20% depending on your marginal tax rate (most people pay 15%). "I doubt it. In the States you would only owe tax if you sold such an item at a profit. ""garage sales"" aren't taxable as they are nearly always common household items and sale is  more about clearing out one's attic/garage than about profit. Keep in mind, if I pay for a book, and immediately sell it for the same price, there's no tax due, why would tax be due if I sell for a loss?" The way I see it, corporation tax is not fundamentally different from VAT. They are both a tax on revenue minus expenses, just what those expenses are is different. I think the main advantage of corporation tax is that it allows capital expenditure to be spread over several years, although as I said this makes it more complicated (and I believe that there are some capital allowances for VAT as well).  One advantage of VAT is that sales in one country are taxed in that country before the money can be sent abroad. It seems simple and fair to split the tax burden between jurisdictions according to how many sales were made in each. A) a tax treaty probably covers this for the avoidance of double taxation. Tax treaties can be very cryptic and have little precedence clarifying them http://www.irs.gov/businesses/international/article/0,,id=169552,00.html B) I'm going to say NO since the source of your income is going to be US based. But the UK tax laws might also have specific verbage for resident source income. sorry it is an inconclusive answer, but should be some factors to consider and point you in the right direction. It's quite common for VAT-registered businesses to quote ex-VAT prices for supply to other businesses.  However you're right that when you make an order you will be invoiced and ultimately have to pay the VAT-inclusive price, assuming your supplier is VAT registered.  If you're not clear on this then you should check since it obviously makes quite a difference. Since your business is not VAT-registered you cannot charge VAT to your customers. Typically tax treaties will cover double taxation (taxes paid in one jurisdiction are deducted in the other jurisdiction so there is no double tax). You'll need an accountant and attorney with experience in international business setups to confirm and determine which jurisdiction gets first priority of tax payment.  In short, this is the wrong place to get a good answer. Talk to (and pay for) professionals to get you properly set up. Yeah, the VAT adds more fairness between who gets the taxes, but is only offset by it being more complicated and needing more bureaucracy. I think it's an interesting idea. If I were a policy analyst I'd like to see what costs are vs. benefit. With the W8-Ben filed, tax will be withheld at a lower rate. (I would expect 10%). Tax treaty treatment will mean that this witholding will reduce your UK tax even if this payment is not taxable there. This is only effective if you actually pay tax. This is how it works for lotteries and dividends as well. If the VAT is offset by not having to pay for employees health insurance, then I wonder what net effect it would have on goods?  Also, if the employees are no longer paying for their share of the employer funded health insurance, then that would, effectively, be more money in the employees pockets.    You're right though, it all comes down to what the numbers look like. I think it should be free. Why? I had a coupon for 35, I bought something for 35.01 including taxes and total to pay was 0.01, rounded to 0.00. I think it's almost the same scenario. The VAT number should be equivalent from the point of view of your client. The fact that you are a sole trader and not a limited liability doesn't matter when it comes down to pay VAT. They should pay the VAT to you and you will pay it to the government. I'll guess that their issue is with tax breaks, it is a bit more tricky to receive a tax break on paid taxes if you buy something abroad (at least it is here in Finland). If they won't pay you because of that, you could open a LTD or contract the services of a 'management company' which will do the job of invoicing, receiving the money and passing it back to you, for a fee. IANAL, I have not been VAT registered myself but this is what I have picked up from various sources. You might want to confirm things with your solicitor or accountant. As I understand it there is a critical difference between supplying zero-rated goods/services and supplying exempt goods/services.  If the goods/services are zero-rated then the normal VAT rules apply, you charge VAT on your outputs (at a rate of 0%) and can claim back VAT on your inputs (at whatever rate it was charged at, depending on the type of goods.. If the goods/services are exempt you don't charge and VAT on your outputs and can't claim back any VAT on your inputs. (Things get complicated if you have a mixture of exempt and non-exempt outputs) According to http://oko.uk/blog/adsense-vat-explained adsense income is a buisness to buisness transaction with a company in another EU country and so from a supplier point of view (you are the supplier, google is the customer) it counts as a zero-rated transaction.