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.
Just looking at CONED, [here is gas](https://www.coned.com/_external/cerates/documents/average_monthly_gas_bills.pdf) and [here is electric](https://www.coned.com/-/media/files/coned/documents/accountandbilling/about-your-bill-rates/average_monthly_electric_bills.pdf).   You'll have to forgive me -- when it comes to NY, I'm more familiar with gas and with residential rates, so what I said doesn't hold true across the board for electric commercial customers.   For residential electric, starting in 2009, delivery started outpacing commodity charges; by 2015 (not sure why they haven't posted 2016 data yet), $29 worth of electricity cost you $49 in delivery charges. For residential gas, the flip occurred in 2010 and was much more significant -- in 2016, a customer whose bill is just over $100 paid $75 for delivery and $25 for the actual gas (part of that is that gas prices are low, part of it is that delivery costs have gone up nearly 50%).   Each utility is different, so the [gas info is here](http://www3.dps.ny.gov/W/PSCWeb.nsf/All/85297E80413DBEDB852581A6006261BE?OpenDocument) and the [electric info is here](http://www3.dps.ny.gov/W/PSCWeb.nsf/ArticlesByTitle/0B9E6D4CE48E09EE852578570055E27B?OpenDocument) if you're interested.   I'm not sure about primers -- I haven't really looked for them -- but I know that many companies and brokers do have some materials on their websites.  For electricity in particular, I'm much more familiar with Texas than New York, but a lot of the principles are the same: look at your bills and make sure you understand all the charges and what your usage/demand is (especially over the course of a year), look up the [utility tariff](http://www3.dps.ny.gov/W/PSCWeb.nsf/ArticlesByTitle/1ABA5E2E4E08F72585257687006F3AB1?OpenDocument), and make sure everything lines up.  I harp on demand charges (a charge based on your peak energy usage during any set interval of time -- 15 minutes in TX, not sure about NY) because that's where commercial customers can get stuck paying really high charges. "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" Assuming you buy the services and products beforehand and then provide them to your clients. Should the cost of these products and services be deducted from my declared income or do I include them and then claim them as allowable expenses? You arrive at your final income after accounting for your incomings and outgoings ?  regularly buys products and services on behalf of clients These are your expenses. invoice them for these costs after These are your earnings. These are not exactly allowable expenses, but more as the cost of doing your business, so it will be deducted from your earnings. There will be other business expenses which you need to deduct from your earnings and then you arrive at your income/profit. So before you arrive at your income all allowable expenses have been deducted. include on my invoices to clients  VAT if you charge VAT. Any charges you require them to pay i.e. credit card charges etc. You don't need to inform clients about any costs you incur for doing your business unless required by law. If you are unsure about something browse the gov.uk website or obtain the services of an accountant. Accounting issues might be costly on your pocket if mistakes are committed. (1) Should I register for VAT?  – If it is below the threshold amount it is purely voluntary. If you register for VAT, you would have to charge VAT and then do returns every quarter. If you can take up this bit of hassle, it doesn't make much of a difference. One thing you need to consider: you get 1% discount during your first year of registering for VAT. If you want to save this discount for when you really need to pay VAT, it could be helpful. (2) What benefits would registering for VAT include?  – Except for reclaiming VAT, where you pay VAT for business expenses, not much. (3) Would I not just hold onto the monies for HMRC ?  – You wouldn't hold any money for HMRC. They will send you notifications if you do not file your returns and pay your VAT quarterly. And get everything cleared from your accountant. If your accountant doesn't answer properly, make it clear you need proper answers. Else change your accountant. If you do something wrong and HMRC gets after you, you would be held liable – your accountant can take the slip if you signed on all business documents provided by your accountant. "Believe it or not, unless you directly contact an accountant with experience in this field or a lawyer, you may have a tough time getting a direct answer from a reputable source.  The reason is two fold.  First, legally defining in-game assets is exceptionally difficult from a legal/taxation stand point.  Who really owns this data?  You or the company that has built the MMO and manages the servers containing all of the data? You can buy-and-sell what is effectively ""data"" on their servers but the truth is, they own the code, the servers, the data, your access rights, etc. and at any point in time could terminate everything within their systems.  This would render the value of your accounts worthless! As such, most countries have overwhelmingly avoided the taxation of in-game ""inventory"" because it's not really definable.  Instead, in game goods are only taxed when they are exchanged for local currency.  This is considered a general sale.  There may be tax codes in your region for the sale of ""digital goods"".  Otherwise, it should be taxed as sale a standard good with no special stipulations. The bottom line is that you shouldn't expect to find much reliable information on this topic, on the internet.  Law's haven't been welled defined, regarding in-game content worth and taxing of sales and if you want to know how you should pay your taxes on these transactions, you need to talk to a good accountant, a lawyer or both." If it's a legitimate cost of doing business, it's as deductible as any other cost of doing business. (Reminder: be careful about the distinctions between employee and contractor; the IRS gets annoyed if you don't handle this correctly.) Is the VAT scam still on the go? I was under the impression that amazon have to pay vat according to the country the items are shipped to, not shipped from? It will be a complete fuck up on the part of our politicians if this loophole has not been closed yet. Within the U.K., Third Party Resellers establish warehouses in the UK, but orders are placed overseas, and Amazon is not required to collect Value Added Tax on behalf of allegedly foreign owned resellers which rely on Amazon to sell items.  Amazon also evades the payment of tax by routing all sales through Luxembourg which, thanks to Jean Claude Juncker of the EU when Prime Minister of Luxembourg negotiated a generous tax sweetheart deal for multi national corporations (incl Amazon) to establish their base in Luxembourg.