Taxation-VAT

Multiple supply

Each of the items being sold for a single consideration is capable of being supplied independently in its own right - each part is physically and economically separable. e.g. gift hamper - apportioned so various elements are taxed at appropriate rate

Composite supply

A predominant element is supplied with other ancillary elements. It would not make sense practically/economically to sell without principal. e.g. phone + accessories + manual at the phone rate

Two-Thirds Rule

used for service contracts e.g. plumbing. VAT exclusive - if cost of goods used exceeds two-thirds of total, the goods rate applies to entire transaction. Otherwise, the service rrate applies to whole transaction.

When is VAT charged?

(1) Supply of goods or services, such that for goods there is a transfer of ownership (2) in the state (3) for consideration (4) for a trade or business (5) by a taxable person

VAT registration thresholds

40K services in 12 months, 80K goods in 12 months (including if 90% of turnover is goods)

Gift VAT rules

VAT liable if gifter got a deduction and VAT exclusive cost is >20 euros. If <=20, not liable or not entitled to credit. Also VAT liable if part of a series/succession of gifts, e.g. crockery set in pieces

Not liable:

• Free replacement under warranty/guarantee

• Advertising/industrial samples free in reasonable quantity

• Goods as security for loan/debt

• Transfer of business from VAT registered person to another

Self-supply

Account for purchased goods as if they were sold. Arises where a VAT registered person purchases goods for business, claims input credit, and subsequently removes from business to use goods personally or use for VAT exempt.

Open market value

The value used to determine VAT liability when there is non-monetary consideration or the transaction is between connected persons

Full VAT invoice details

• Name/address of trader

• Trader VAT number

• Name/address of customer

• Date of issue of invoice

• Date of supply

• Full description of goods/services

• Unit price exclusive of VAT and any discounts/deductions

• Quantity/volume of goods supplied

• Consideration exclusive of VAT in euros

• Rate and amount of VAT calculated at each VAT rate

Simplified VAT invoice

• Allowed where invoice is not greater than 100 euros and customers are in the state

  • Date of invoice issue

  • Sequential number to uniquely identify

  • Supplier details including VAT registration number

  • Description of goods/services supplied

  • Tax due or sufficient info to calculate tax due

Cash receipts basis

Allowed where the trader applies for permission and the turnover business is not likely to exceed 2 million in a 12 month period OR trader derives 90%+ turnover from sales to unregistered persons

Intra-community acquisition

EU imports into Ireland e.g. VAT registered person in France sells wood to VAT registered person in Ireland

French supplier charges no VAT and their invoice only shows the net amount.

Irish company self-accounts by taking the net amount and claiming it as an input and output credit for Irish VAT in same return. The effect is therefore nil

Exempt suppliers who acquire goods >41,000 in 12 months have to register for VAT for the EU acquisition. Cannot claim input credit and so will self-account for the VAT on sale

Annual VAT return

• Apply to Revenue and granted only if Revenue believes trader will satisfy obligations

• VAT return is for their accounting period and is to be filed on the 19th/23rd in the month following their financial year end

• They must estimate their total VAT liability over the period and pay it in monthly direct debit installments over 12 months

• If balance due exceeds 20% of total liability for year, Revenue may charge interest on outstanding balance. Charged from 6 months prior to due date

Interest and penalties for not paying VAT

4,000 penalty for failing to submit returns
Revenue may send a VAT estimate. Registered trader may appeal and submit correct VAT return with interest.

Interest rate is 0.0274%

Cannot claim VAT on…

Provision of food, drink, accommodation (except for qualifying accommodation for a qualifying conference), entertainment expenses or other personal service for VAT registered person, agents or employees, even if for business reasons.

Petrol purchases except as inventory

No valid VAT invoice

VAT on purchase/hire/lease of passenger motor vehicles

20% allowed for categories A and B for company cars used for >=60% business purpose

Otherwise not allowed

Clawback - 100% for <6 months, 75% 6-12 mo.s, 50% 12-18, 25% 18-24, 24+ 0%
When it ceases to be used for at least 60% business purpose within the 2 years, or is disposed of

Annual Return of Trading Details

Net sales, purchases for resale, purchases not for resale, purchases to EU, sales to EU at each VAT rate