I am puzzled over the way sales are now being credited. I set for example a margin on the Mens T Shirt of £4.50. In the account it says “originally £4.50” yet credits £4.09. Why?
I cannot work out what this is as if it were due to you incorrectly witholding tax then the amount would be lower.
Whats the point in me setting a margin if the payout is lower?!
The customer paid in €. The margin you made in € was 5,35 EUR. Then you deduct the VAT (19%) and transfer it back to GBP.
I’ve just put in a feature request to show the margin in the currency it was paid in since this is a little intransparent! Thanks for brining it up 
I have done some further investigation and it appears every transaction since 5/2/20 has had this weird deduction made.
I urgently need this investigating as I believe we are having funds witheld for no grounds as the percentage seems to vary and it does not match any UK VAT rate or the 15% Witholding Tax you mention (neither of which we should be levied anyway as we have supplied the Tax Form ages ago.
For example on 5/2 the Design Fee was £3 but was credited as £2.50 which would work out as a roughly 17%. On 13/3 a transaction under the new model generated £4.50 yet the credit was £4.09 equalling roughly 9%.
There really is no point us setting margins if the figures we receive are different.
I need these deductions reinstated into our account, specifically before the next payout of 15/4/20.
Will get back to you latest end of today with some more specific info!
Okay but I cannot see how these deductions can be justified. Either we set our margins and thats what we get paid or nothing. The fact that these deductions vary makes no sense and as I said we have been registered for both VAT and Tax since the start.
Hey there, I have forwarded your question but I will only receive a reply tomorrow! Sorry!
This is due to the 20% VAT in the UK. So 3GBP *100/120 = 2.50GBP.
This is what I explained above. You The customer paid in EUR. The margin you made in € was 5.35 EUR. Then the VAT of Germany gets deducted (since the person who bought it is located in Germany). Therefore you calculate
5.35 EUR *100/119 = 4.50 EUR and then the 4.50 EUR are exchanged into GBP.
These are not withholding taxes but just plain VAT deductions that always happen 
Does this make it clearer?
Yes it makes it clearer we are having VAT deducted in error. We entered our VAT number in our account and returned the Tax Form as mentioned here: https://help.spreadshirt.com/hc/en-gb/articles/207194399-Taxation-of-Your-Earnings
Up until 5/2 we had VAT correctly not deducted under the EU VAT reverse charge rules.
Yes the UK left the EU technically on 31/1/20, but we are still in transition and no changes have been made to the Customs Union and none were due to be made until 31/12/20 (however its possible after this there may still be a customs union).
Please expedite a refund of the incorrectly deducted VAT and ensure that until 31/12/20 VAT is not deducted.
I really need this resolving, your support staff clearly do not understand the situation and keep referring to the reverse charge rules.
Your site clearly states that a EU VAT registered company receives their payouts without VAT charged.
This was the case until February.
We have provided all the necessary Tax information in the ways specified months ago.
I have traded in the EU for years and never had VAT charged when selling or purchasing from another EU VAT registered business.
Please get this resolved and credit back all the deductions since February.
I’m on it. I just want to make 100% sure that the explanation is correct. Should have an answer latest tomorrow.
Ok. But be sure to observe that until February we received correct payments without VAT deducted.
As the partner area says:
“For EU Partners without a residency (or company headquarters) in Germany, a reverse charge procedure is observed.”
Reverse charge means that we account for the VAT in the UK. It means that on a margin of £4.50 we do not have VAT charged by Spreadshirt.
No, this isn’t correct. Please have a look at the sales you were credited before: Spreadshirt
Nothing changed.
In our T&Cs you can see: General Terms & Conditions for Partners | Spreadshirt
Moreover, it also seems that there is a confusion when it comes to the defintion of reverse charge procedure. It simply means that the services which you provide to Spreadshirt are subject to VAT in Germany. However, so that you do not have to register in Germany, there is a “reverse charge procedure” in the VAT law. The German service recipient (i.e. Spreadshirt) pays the VAT incurred in Germany on the commission earnings your earnings. In order for this to be completely correct, the you give us your VAT ID. The amount paid out to you is not influenced by the existence of the VAT-ID. However, it is necessary for the correct processing of the reverse charge procedure.
Then I firmly believe Spreadshirt are not applying the EU VAT laws correctly.
I have for instance bought from Thomann in the past a German Company. On supplying my VAT number they sell me goods without VAT charged.
I account for the VAT here to the UK tax authority. If I sell to a German company likewise I do not charge VAT if they provide their registration to me.
What you are doing is charging me German VAT which I cannot offset or reclaim.
Please look at all the links I have supplied including official EU rules that clearly state VAT should not be charged or received between member states if business transactions.
Your own FAQ and notes in the partner area also clearly state that Turnover Tax will not be deducted if a VAT number is provided.
As your website says:
“ If you are registered as an entrepreneur in another EU country , we need your EU VAT identification number. To do this, please send us the following form to confirm a non-German EU VAT identification number. Pursuant to Section 13b of the German Turnover Tax Act (UStG), taxation is based on the so-called reverse charge procedure, meaning you will receive your earnings without turnover tax.”
So we should not be charged turnover tax and should receive the margin in full.
Otherwise what is the point in providing our VAT number?
In any event what is the point of setting a margin if that is not what we receive?
If you deduct VAT then the cost to us of the garment in the partner area should also be with VAT deducted
No VAT should be charged between EU businesses, that’s EU law and we both have to report it our tax authorities.
Right I have done some maths. The deductions are Witholding Tax not VAT.
In your FAQ it says you charge 15% on 60% of the Margin.
On £4.50 I used this formula and the amount = £4.09 which is what we were credited.
However we have our TIN in our account, so we should not be charged withholding tax.
No, it’s the VAT! Sorry I can only repeat myself.
The customer paid in EUR. The margin you made in € was 5.35 EUR. Then the VAT of Germany 19% gets deducted (since the person who bought it is located in Germany). Therefore you calculate
5.35 EUR *100/119 = 4.50 EUR and then the 4.50 EUR are exchanged into GBP on the day the sale was made: Currency Converter - ECB Statistical Data Warehouse.
This has nothing to do with withholding tax!
Moreover, VAT always gets deducted when you make a sale. There’s no influence on it whether your a registered VAT company or not. This can be different when you buy something. But you’re making a sale here.
Ok I understand.
For the sake of clarity you need to think the margin system as I imagine many partners will be surprised when they receive their credits.
No point deciding on a margin if it doesn’t show it net at least show it minus German VAT or the VAT of the country the partner is trading from
Having more transparency regarding the VAT is on the long list of improvement to-do’s and I’ve already added your valuable feedback
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