Bike to Work scheme - the Megathread - Read post #1 before posting

BoardsMember

I'm being told by my accountant that if buying from Germany that the Employer should not supply the VAT Number as part of the purchase. You the German VAT, and leave it at that, i.e. you pay the VAT in the country of supply.

This approach certainly keeps things simpler for the Company.

Statler

BoardsMember wrote: »

I'm being told by my accountant that if buying from Germany that the Employer should not supply the VAT Number as part of the purchase. You the German VAT, and leave it at that, i.e. you pay the VAT in the country of supply.

This approach certainly keeps things simpler for the Company.

It also makes things simpler for your accountant! Not sure of the legalities of doing it that way but the German VAT rate is 19% for bikes as opposed to our 23%, so by opting to pay the German rate you save 4%...

Beasty

I actually think you could be liable for VAT in both countries by not supplying the VAT number to the retailer. The Irish Revenue are certainly losing out otherwise and the correct VAT is not being applied (unless the employer is not VAT registered in Ireland)

RedXIV

I'm 90% sure I know the answer here but if I swap employers does the eligibility reset? I got one with old employer 2 years ago and starting with new employer next week?

BoardsMember

Beasty wrote: »

I actually think you could be liable for VAT in both countries by not supplying the VAT number to the retailer. The Irish Revenue are certainly losing out otherwise and the correct VAT is not being applied (unless the employer is not VAT registered in Ireland)

I can't imagine you'd have to pay VAT in both countries.

Revenue lose out on VAT when I buy things in Europe ordinarily. Unless someone has something categorically correct I will follow the suggestions of the accountant.

Kinet1c

If both companies are VAT registered, typically there would be no VAT charged on the invoice. The Irish company would need to provide their VAT number to the German company for verification/documentation purposes.

On the chance that the German company's turnover in Ireland exceeds a certain amount, then they would need to register for VAT here in Ireland also.

I can't think of a case where VAT would be paid in both countries for inter EU transactions.

CramCycle

RedXIV wrote: »

I'm 90% sure I know the answer here but if I swap employers does the eligibility reset? I got one with old employer 2 years ago and starting with new employer next week?

There was debate on here about it, I have done it, the wording of the legislation implies that it is once every 5 years per employment. Different employer, different employment.

Idleater

CramCycle wrote: »

There was debate on here about it, I have done it, the wording of the legislation implies that it is once every 5 years per employment. Different employer, different employment.

Why would a civil servant even consider giving up a job for something elsewhere :-D

Beasty

BoardsMember wrote: »

I can't imagine you'd have to pay VAT in both countries.

Revenue lose out on VAT when I buy things in Europe ordinarily. Unless someone has something categorically correct I will follow the suggestions of the accountant.

The scenario you outine would mean German VAT would automatically be collected. However the Irish Revenue are losing out and would look for their correct return. You then need to be able to persuade the German tax authorities to give the money you have paid them back. My dealings with the German tax authorities are not particularly extensive, but I've tended to find them quite difficult to deal with

Under the distance selling rules (and VAT is a Eupoean Tax which is applied consistently across the EU) as an individual you pay the VAT in the selling country unless the seller is registered for VAT in Ireland (in which case they charge Irish VAT). Sorry but them's the rules ...

BoardsMember

Ok. That makes sense to me. As in the seller is my employer and not the company in germany. Maybe I'll ignore the accountant!

RainyDay

CramCycle wrote: »

There was debate on here about it, I have done it, the wording of the legislation implies that it is once every 5 years per employment. Different employer, different employment.

Any chance of a link to the debate? This goes against my understanding.

CramCycle

RainyDay wrote: »

Any chance of a link to the debate? This goes against my understanding.

I could be wrong but I am pretty sure it is covered in this thread.

Beasty

I think it's been mentioned a couple of times in this thread (and possibly some of the thread's predecessors). I am of the view the 5 years relates to each employment as set out by Cram, and my interpretation is based on the wording adopted. We have one or two other tax experts who have offered the alternative interpretation. It's unlikely ever to be tested as no-one is likely to go to court over something so small.

EDIT - the latest discussion on the point in this thread was around 4 January this year

mathie

Are Wiggle and CRC definitely registered for VAT in Ireland?

Are any other UK stores?

thanks
m

Beasty

mathie wrote: »

Are Wiggle and CRC definitely registered for VAT in Ireland?

Yes, as are the likes of Amazon

Not aware of any other major UK cycling gear online retailers, but if you check online and ensure you show the delivery destination as Ireland you will see a slight price difference with when it's the UK

Kaisr Sose

del_boy13 wrote: »

I had a similar experience with Canyon recently so I bought one from Rose instead. Very similar bikes with just slight differences in spec.

Interesting.

Will Rose submit an invoice with VAT at 23℅? Was the sale under the cycle to work scheme?

I would guess they have to apply 23% to the transaction.

bwalsh1983

More than likely has ben answered before but is it straightforward enough buying something from across the border through the bike to work scheme?

My company uses one of the schemes but this is only to make it easier for HR, if the shop in the north supply me with a quote it should be straightforward from there no?

Beasty

Kaisr Sose wrote: »

Interesting.

Will Rose submit an invoice with VAT at 23℅? Was the sale under the cycle to work scheme?

I would guess they have to apply 23% to the transaction.

No-one make any sales under the bike to work scheme. They make a sale to your employer applying the correct VAT. So far as the retailer is concerned that is the end of the matter

Beasty

bwalsh1983 wrote: »

More than likely has ben answered before but is it straightforward enough buying something from across the border through the bike to work scheme?

My company uses one of the schemes but this is only to make it easier for HR, if the shop in the north supply me with a quote it should be straightforward from there no?

The employer buys the bike. They can buy it from where they like. If they are happy paying a foreign retailer then that's fine

Kaisr Sose

bwalsh1983 wrote: »

My company uses one of the schemes but this is only to make it easier for HR, if the shop in the north supply me with a quote it should be straightforward from there no?

I would say its up to your company to agree to a direct payment. Many large employers go the voucher route to avoid lots of direct payments to multiple retailers.

BoardsMember

Kaisr Sose wrote: »

Interesting.

Will Rose submit an invoice with VAT at 23℅? Was the sale under the cycle to work scheme?

I would guess they have to apply 23% to the transaction.

Rose should submit an invoice to the employer. Ideally the employer should have supplied thier VAT number, so the only invoice should have no VAT. When the employer sells the bike to you under the bike to work scheme they must charge you VAT at 23%. Its the VAT inclusive amount that constitutes the 1k BIK b2w scheme threshold.

Omega28

How can you get a family member to purchase it for you under this scheme?

Kaisr Sose

Beasty wrote: »

No-one make any sales under the bike to work scheme. They make a sale to your employer applying the correct VAT. So far as the retailer is concerned that is the end of the matter

I don't understand that post. No-one makes any sales under the bike to work scheme? As you then say, the shop makes the sale to the employer. That's how the scheme works whether the retailer is across the road or overseas.

However the VAT invoice is crucial to this transaction. If the overseas retailer does not charge VAT at 23%, the employer must self assess for the difference. However, there seems to be some doubt/difference as to whether the employer can then reclaim the full amount of VAT. That is why many employers won't facilitate purchases from overseas. (Correct me if wrong there)

My employer will operate the scheme with an overseas supplier, if they have an Irish VAT numbern(eg wiggle, who have an Irish VAT number). However, they might consider a purchase from an overseas supplier with no Irish VAT no. once they invoice in euro and apply VAT at 23%, provided the VAT issue can be treated the same as if buying from an Irish VAT reg supplier. (Hence the VAT/invoice question about Rose)

For the employer, that (VAT) is what is important. Its certainly not about the retailer and for the employer it certainly does not end with the retailer. If the VAT operation is wrong, there will be no sale/purchase from a non Irish supplier. ( for my employer anyway)

Many non Irish retailers, such as bike24.de charge VAT at 23% because they exceed the threshold for sales to Ireland. Same as buying from amazon, when you enter the delivery address as Ireland, the price changes to reflect the local VAT rate. Revenue (Ireland) get this VAT.

My question was as to whether Rose were the same. I assume they are as 50k of sales is the threshold for having to charge VAT at Irish rates on sales to Ireland.

I must paraphrase that I am not an accountant, but I know a little about self assessing for VAT. I don't think you fully understood my post, as the response gave information I was not looking for.

Can anyone advise on my question about Rose?

Kaisr Sose

BoardsMember wrote: »

Rose should submit an invoice to the employer. Ideally the employer should have supplied thier VAT number, so the only invoice should have no VAT. When the employer sells the bike to you under the bike to work scheme they must charge you VAT at 23%. Its the VAT inclusive amount that constitutes the 1k BIK b2w scheme threshold.

Are you sure the VAT is excluded from the retailer invoice? Companies, whether VAT registered or not, must pay VAT at the applicable rate for all purchases.

Even if the applicable rate is 0%, the invoice for goods must include the VAT rate and amount. The company (employer) can then reclaim the VAT on purchases against VAT on sales.

If the supplier is non EU, or does not include VAT (eg. not VAT reg) , the company must self assess for VAT. This applies to all goods and I reckon that VAT law makes no exception for purchases of Bikes over other goods.

dreamerb

Dylanmc111 wrote: »

How can you get a family member to purchase it for you under this scheme?

You can't. Not legally. It's a condition of the scheme that the bicycle is for the employee and is intended to be used (partly or mainly) to cycle to work.

GeneralC

Two bike stores told me today I can get a family member to purchase it, then I can give them the money...

Kinet1c

GeneralC wrote: »

Two bike stores told me today I can get a family member to purchase it, then I can give them the money...

My friend Bob told me that he got a bike a few years ago by doing this, keeping his own alive for a further purchase down the road.

dreamerb

GeneralC wrote: »

Two bike stores told me today I can get a family member to purchase it, then I can give them the money...

Yeesh. It's illegal. Is it done? Yes. But it's illegal and the person in the frame if it's discovered is the family member, not the person who gets the bike.

If you don't qualify for the cycle to work scheme yourself, there are better deals available secondhand than ever. Lots of people sell on the barely used legitimately bought bikes after wussing out.

GeneralC

dreamerb wrote: »

Yeesh. It's illegal. Is it done? Yes. But it's illegal and the person in the frame if it's discovered is the family member, not the person who gets the bike.

If you don't qualify for the cycle to work scheme yourself, there are better deals available secondhand than ever. Lots of people sell on the barely used legitimately bought bikes after wussing out.

I've been looking on the likes of adverts/donedeal for a decent road bike, but haven't seen much

CramCycle

GeneralC wrote: »

Two bike stores told me today I can get a family member to purchase it, then I can give them the money...

MOD VOICE: Two bike stores have advised you that they will help facilitate fraud. The next person to suggest it or advise anyone to do it will be carded.