Vat for retailers

zig

Hi All,
This is something that is STILL bugging me,
So Ive set up a small food snack business, and been lucky enough to get my product into a few shops/bars on a promo price. Its fairly low key at the moment and Im not looking for any profit right now, I just want people to know the brand.
But heres my issue, im embarrassed to say Im still getting hung up on VAT,
Im just writing this here to double check with people am I right...

I sell a product to a shop for 80c, they charge 1.40
Do they pay VAT on the 1.40? i.e 32c? And so they get 1.08 from the product?
And them earning 28c profit from 80c would be considered 35% mark up yes?

Thanks for any help, I know I should probably know that by now , I just need to clear it up once and for all, because I think I may have been confusing myself.

J.Ryan

If the product is "eligible" for VAT then the sales price is VAT inclusive, the VAT would be 26c.

zig

J.Ryan wrote: »

If the product is "eligible" for VAT then the sales price is VAT inclusive, the VAT would be 26c.

Thanks JRyan, you mean the sales price from the retailer to the customer yes?

J.Ryan

Yes

prospect

Assuming this is not a VAT exempt product, and that you are VAT registered then you charge the shop 80c + VAT.

They then charge €1.40 including VAT, but they claim back the VAT you charge them, so:

(VAT at 23%)

You charge 0.80c + 0.19c = €0.99

They charge €1.40 (of which 0.26c is VAT) so they get €1.14 (or 0.34c profit).

So, they paid 0.80c, they make a profit of 0.34c and the nett VAT to the government is 0.07c

zig

Thanks Prospect, that cleared up the confusion!