Is VAT applied when a tradesman charges for materials?
The plumber will apply for and receive a refund of the amount of VAT he paid on the purchase amount.  That's the cornerstone of how VAT works, as opposed to a sales tax.  So for example: (Rounded approximate amounts for simplicity) Now, at each point, the amount between (original cost VAT) and (new VAT) is refunded.  So by the end, a total of £3 VAT is paid on the pipe (not £6.2); and at each point the business 'adding value' at that stage pays that much.  The material company adds £1 value; the producer adds £4 value; the supplier adds £5 value; the plumber adds £5 value.   Each pays some amount of VAT on that amount, typically 20% unless it's zero/reduced rated.  So the pipe supplier pays £1 but gets a £0.2 refund, so truly pays £0.8.  The plumber pays £3 (from your payment) but gets a £2 refund.   So at each level somebody paid a bit, and then that bit is then refunded to the next person up the ladder, with the final person in the chain paying the full amount.  The £0.2 is refunded to the producer, the £1 is refunded to the supplier, the £2 is refunded to the plumber.
Nope pay the employer back the due does not involve any tax. Just keep a record of the transaction so that its available as reference. A rather good IRS paper on the topic states that a donation of a business' in-kind inventory would be  Under IRC 170(e)(1), however, the fair market value must be   reduced by the amount of gain that would not be long-term capital gain if the   property had been sold by the donor at the property's fair market value (determined   at the time of the contribution). Under this rule, deductions for donated inventory   are limited to the property's basis (generally its cost), where the fair market value   exceeds the basis.  There are references to IRC regulations in a narrative context you may find helpful: This paper goes on for 16 pages describing detailed exceptions and the political reasons for the exceptions (most of which are concerned with encouraging the donation of prepared food from restaurants/caterers to hunger charities by guaranteeing a value for something that would otherwise be trashed valueless); and a worked out example of fur coats that had a cost of goods of $200 and a market value of $1000. There's nothing illegal in hiring your friends to manage your property or provide you services, and it is definitely deductible. There's nothing specific to reference here, this is a standard deduction for a landlord just as any. I mentioned 1099 in the comments - if the total is over $600 and your friend is not a corporation, then you should issue 1099. That would provide you the necessary substantiation of the deduction (of course you need to keep some documentation that shows the relation between the money paid and the services provided, like a contract, or invoice or receipt). You can (but don't have to) issue 1099 for lower amounts as well. If you don't - you'll need to keep more documents as substantiation - cached checks, documents about the agreement and the amounts, etc. In addition, your deduction may be disallowed if your friend doesn't declare this as taxable income (issuing 1099 helps here since your friend will be forced to declare it, otherwise it will be recorded as a mismatch by the IRS and trigger an audit). As to reimbursements - that would go into the same bucket. They'll have to deduct their expenses from that income on their own taxes. So if you give them $300 for the work, $300 for the miles, and $300 for the materials they bought - you issue the 1099 for $900, and let them deduct the $600 on their own Schedule C. But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe.  Sales tax is charged only to end customers, not to businesses that themselves charge sales tax.  But this means that a criminal business can charge tax and just pocket it unless someone else reports it.  They can also evade income tax the same way.  Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax).   The whole point of a Value Added Tax (VAT) is that they charge at each level.  This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it.  So the seller has to pay the VAT that they charged.  Or the tax authorities know and can revoke their VAT license.   If only the end user is charged tax, then fraud is easier than under a VAT.  So easy, I doubt they have a special name for it.  The fraudulent business just collects tax from end users and disappears.  Or simply fails to record those transactions.  You could call it missing transaction record fraud, but why bother?  It's just straight up tax fraud.  The complexity of the carousel fraud arises from the difficulty of evading a VAT. What you are doing is barter trade. Most countries [if not all] would tax this on assumed fair value. There are instances where countries may relax this norm in border areas for a small amount.   Barter is not just for gold – one can virtually do this for any goods, i.e. sell garments in exchange for oil, sell electronic chips in exchange for consumer goods, etc. Quite a few business would flourish doing this and not exchange currency at all, hence the need for government to tax on the [assumed / calculated / arrived/ derived] fair value. A word of caution: at times this may not be fair at all and may actually cost more than had one done a transaction using currency. The most important thing to remember is that being VAT registered, you must add VAT to every bill, so every bill will be 20% higher. If the bill payer is a company, they don't care because they deduct the 20% VAT from their own VAT bill. If the bill payer is a private person, their cost of your services has just gone up by 20% and it is going to hurt your business. So the question is, what kind of customers do you have?  But if your customers are companies, then the flat rate scheme mentioned above is very little work and puts a nice little amount of extra cash in your pocket (suitable if your bills are mostly for your work and not for parts that you buy for the customer and bill them for). I don't think so, but:  - It depends on the product, some products are simple (Vodka) others have plenty of restrictions (Plutonium). So without you naming what your product is nobody can help you. - Regulation differ for each country. Greece and Italy are different countries.  For most products you pay some import duty, the applicable VAT and some customs fees and all is well. "You cannot ""claim back"" VAT. What happens is that if you sell goods with VAT and charge customers VAT, you would have to send that VAT straight to HMRC, but if your business itself paid VAT, then you already paid VAT, so you have to send less.  As an example, if you send an invoice for £10,000 plus £2,000 VAT, and you paid yourself £500 VAT on business related expenses, then you need to send £2,000 - £500 = £1,500 to HMRC.  But if you don't send invoices including VAT, then you owe HMRC £0. Any VAT you paid on business related expenses is lost; HMRC won't pay you money.  BTW. Only VAT on business related expenses can be deducted. So if you want to be ""smart"", register for VAT and get the VAT on your weekly shopping bill refunded, forget it." "TL;DR - my understanding of the rules is that if you are required to register for GST (earning more than $75k per annum), you would be required to pay GST on these items. To clarify firstly: taxable income, and goods and services tax, are two different things. Any income you receive needs to be considered for income tax purposes - whether or not it ends up being taxable income would be too much to go into here, but generally you would take your expenses, and any deductions, away from your income to arrive at what would generally be the taxable amount. An accountant will help you do this. Income tax is paid by anyone who earns income over the tax free threshold. By contrast, goods and services tax is a tax paid by business (of which you are running one). Of course, this is passed on to the consumer, but it's the business that remits the payment to the tax office. However, GST isn't required to be charged and paid in all cases: The key in your situation is first determining whether you need to register for GST (or whether indeed you already have). If you earn less than $75,000 per year - no need to register. If you do earn more than that through your business, or you have registered anyway, then the next question is whether your items are GST-free. The ATO says that ""some education courses [and] course materials"" are GST-free. Whether this applies to you or not I'm obviously not going to be able to comment on, so I would advise getting an accountant's advice on this (or at the very least, call the ATO or browse their legal database). Thirdly, are your sales connected with Australia? The ATO says that ""A sale of something other than goods or property is connected with Australia if ... the thing is done in Australia [or] the seller makes the sale through a business they carry on in Australia"". Both of these appear to be true in your case. So in summary: if you are required to register for GST, you would be required to pay GST on these items. I am not a financial advisor or a tax accountant and this is not financial advice." It's called bartering and the IRS has a page titled Four Things to Know About Bartering. The summary is -  The bottom line is this is taxable. According to HMRC's manual BIM42105, you can't deduct expenses of this kind when calculating your profits for corporation tax: No deduction is allowed for expenditure not incurred wholly and exclusively for trade purposes So at the least, the company will have to pay corporation tax on this donation at some point, assuming it ever makes any profits. There's also the risk that HMRC would say that what is really happening is that you are making a personal donation to this person and the company is giving you income to allow you to do it. In that case, you'd be liable to income tax and employees national insurance, and the company liable to employers national insurance. It should then be deductible from corporation tax, though. Depends on the state, in Texas you should charge sales tax because the shipment is going to a freight forwarder in Texas.  That being said, once you have the bill of lading you can have your tax credited by the vendor.  It is one of the documents the state will except in lieu of sales tax for exports.  There are five.  You can find this info at the Comptrollers website. I would validate that you are being charged sales/use tax and not withholding tax, withholding would be related to your country. Doc requirements for export vary from state to state. "The Dutch tax office is pretty decent, although slightly overburdened. Don't expect a lot of help, but they're not generally known for making a lot of problems. Digital copies are fine, for instance. They will send you your first VAT notice. You probably would have known if your company would have been incorporated, so I'll assume you're just trading as a natural person. That means you still have to file VAT returns, but the business income is just filed annually as ""other income"".  For the VAT part, you'll need to invoice your customers. Keep a copy of those invoices for your own bookkeeping, and keep track of the matching customer payments. Together these form the chief evidence of your VAT obligation. You also have a VAT deduction from your purchases (it's a Value-Added Tax, after all). Again, keep receipts. The usual VAT period is 3 months, so you'd pay VAT 4 times a year. But if you would pay less than 1883 euro, you might not need to pay at all and just need to file annually The income part is easy with the receipts you had for VAT purposes anyway. Dutch Tax Office, VAT, in English" "The HMRC has a dedicated self-help/learning site that is helpful here: It's important to tell HMRC that you are self-employed as soon as   possible.  If you don't, you may have to pay a penalty.  You don't want to pay more to HMRC than you have to as it is a waste   of your money. Your business has started when you start to advertise or you have a   customer to buy your goods or services.  It is at this point that your business is 'trading'. You cannot   register before you start trading. For example, if you advertise your business in the local newspaper on   15 January but do not get your first customer until 29 March; in this   case, you have been trading since 15 January. You must tell HMRC within six months of the end of the tax year in   which you start self-employment.  You must therefore register by 5 October.  But it's best to register well before this so that you do not forget   to do so. The HMRC also has a YouTube channel with help videos, and ""Am I Trading or Not?"" might be of particular interest to you. Most of the registration is based around the concept of starting to work with the intent to make a profit. By the letter of law and regulations, you should register within six months of the end of the tax year you started to avoid any potential penalty. However note that the situation is different based upon your intent. If you begin making/putting up videos online as a hobby with the hope that you can make something to help you defray the basic costs involved, and the total amount you make is relatively small (say, less than 500 pounds), you will not be classified as ""trading"" and likely have no need to register with HMRC.  As soon as you begin to get in regular payments, maybe a single payment of a significant size, or multiple payments for a similar service/item, you are vastly more likely to need to register. From my reading you would likely be safe to begin putting up videos without registration, but if you begin spending a large portion of your time over an extended period (multiple months) and/or begin getting payments of any notable size then you should likely register with the appropriate services (HMRC, etc). As is the case in both the USA and UK, simple registration is pretty cheap and the costs of little/no income are usually pretty minor.  Also note that the HMRC trading and self-employment regulations are unusual compared to many US laws/institutions, in that you are explicitly permitted to begin doing something and only register later. So if you start doing videos for an entire tax year + 5 months and make nothing significant, you'd seemingly be fine to never register at all." "The bill proposed to ""Under existing law, employers may take tax deductions for the costs associated with moving jobs out of the country. The proposed legislation would have eliminated that, and used the resulting new revenue to fund a 20 percent tax credit for the costs companies run up ""insourcing"" labor back into the U.S."" From http://abcnews.go.com/m/blogEntry?id=16816660 as found by beermethestrength. I will explain this in an example below.   Lets use allen edmonds. I manufacture shoes and sell them in the US. The facts we will assume is Revenue or sales is $100. Manufacturing cost is $50. Tax rate is 10%. Therefore, Profit before tax is $100 -$50 = $50. Tax is $5. Net profit is $45.  However, suppose offshoring to Canada saves money. They say please and thank you at every opportunity and the positive work environment allows them to work faster. Correspondingly to make the same number of shoes our costs has decreased because we pay less for labour. The manufacturing cost decreases to $30. However, we incur costs to move such as severance payments to layoff contracted employees. (I promise to hire you and pay $1 a year for 2 years. I fire you at the end of the first year. To be fair, I pay you $1) However, it can be any legitimate expense under the sun. In this case we suppose this moving cost is $10. Revenue or sales is $100. Manufacturing cost is $30. Moving cost is $10. Tax rate is 10%. Profit before tax is $100 -$40 = $60. Tax is $6. Net profit is $54. Yay more jobs for Canadians.   However, the legislation would have changed this. It would have denied that moving expense if you were moving out of the country. Therefore, we cannot consider $10 worth of expenses for tax purposes. Therefore Revenue or sales is $100. Manufacturing cost is $30. Tax rate is 10%. Profit before tax for tax purposes is $100 - $30 = $70. Tax is $7. Net profit for tax purposes is $63. However, my accounting/net/real profit is $53. I must deduct the $10 associated with moving. The difference between the two scenarios is $1. In general our net profit changes by our moving cost * our tax rate.  There is no tax break associated with moving. In Canadian tax, any business expense in general can be deducted as long as it is legitimate and not specifically denied. I am uncertain but would assume US tax law is similar enough. Moving expenses in general are legitimate and not specifically denied and therefore can be deducted.  Offshoring and onshoring are seen as legitimate business activities as in general companies do things to increase profit. (forget about patriotism for the moment).  The bill was to make offshoring more expensive and therefore fewer companies would find offshoring profitable. However, republicans defeated this bill in congress. Most likely the house  For completeness let us examine what would happen when we onshore (bring jobs from canada to us :( ). In our example, silly unions demand unrealistically high wages and increase our cost of manufacturing to $50 again. We decide to move back to the US because if it is the same everywhere for the sake of silly national pride we move our jobs back to the US. We incur the same moving cost of $10. Therefore we have Revenue or sales is $100. Manufacturing cost is $50. Moving cost of $10. Tax rate is 10%. Profit before tax for tax purposes is $100 - $60 = $40. Tax is $4. However, we are given a 20% tax credit for moving expense. $10 * .2 = 2. The government only assess us tax of 2. Net profit is $38. Tax credits are a one time deal so profit in the future will be $100 -$50 - $5 = $45. Same as the first example.  insourcing = onshoring , outsourcing = offshoring for the purposes of this article. Not quite the same in real life."