Vat rates confusion

Miriaml

Hi can someone please help

My mate is opening up a garage and is unsure what vat rates for what

He paids 23% vat on car parts and tyres he buys for customer's but what rate is he to charge
And also for labour what vat rate is that?

Thanks

L.Jenkins

He would charge 23% for labour and the cost of parts to him. If he pays €123 inclusive of 23% vat on parts, he would only charge the customer €123 as the vat has already been paid. He would charge 23% on the labour. So if labour is €200, he would charge €246 which includes 23%.

hjr

Take a look at this:

http://www.revenue.ie/en/tax/vat/guide/supply-of-services.html

13. Services taxable at the rate of goods (the two-thirds rule)

Where the VAT-exclusive cost of goods to a supplier exceeds two-thirds of the VAT-exclusive price charged to a customer the supply is taxable as a supply of goods. Where the VAT-exclusive cost of goods to a supplier does not exceed two-thirds of the VAT-exclusive price charged to a customer the supply is taxable as a supply of services. This is known as ‘the two-thirds rule’.

exaisle

L.Jenkins wrote: »

He would charge 23% for labour and the cost of parts to him. If he pays €123 inclusive of 23% vat on parts, he would only charge the customer €123 as the vat has already been paid. He would charge 23% on the labour. So if labour is €200, he would charge €246 which includes 23%.

hjr is correct in that the two-thirds rule applies.

Just to clarify.....if he just buys and sells the parts over the counter, the rate is 23%.

The rate of VAT on Motor repairs and servicing is 13.5% EXCEPT where the cost of parts (net of VAT) is more than two thirds of the total cost (net of VAT). (The two-thirds rule).

So...in the above example....parts €100 (exclusive of VAT) plus labour €200....the cost of the parts is well below 2/3rds so the total invoice would be €300 plus VAT @ 13.5% = €340.50.

There's an exception when it comes to tyres though:
If he sells tyres and fits them to a customer's car, the rate will also be 23%, because the markup on tyres is small and the cost of the tyres compared to the amount charged to the customer (net of VAT) will be more than 2/3rds.

ants09

exaisle wrote: »

hjr is correct in that the two-thirds rule applies.

Just to clarify.....if he just buys and sells the parts over the counter, the rate is 23%.

The rate of VAT on Motor repairs and servicing is 13.5% EXCEPT where the cost of parts (net of VAT) is more than two thirds of the total cost (net of VAT). (The two-thirds rule).

So...in the above example....parts €100 (exclusive of VAT) plus labour €200....the cost of the parts is well below 2/3rds so the total invoice would be €300 plus VAT @ 13.5% = €340.50.

There's an exception when it comes to tyres though:
If he sells tyres and fits them to a customer's car, the rate will also be 23%, because the markup on tyres is small and the cost of the tyres compared to the amount charged to the customer (net of VAT) will be more than 2/3rds.

The two thirds rule is not applicable.

He would charge vat at 13.5% on all work done, irrespective off how much the parts or labour is.

If he sells tyres he charges 23% vat

If he sells the parts only he charges 23% vat.

exaisle

ants09 wrote: »

The two thirds rule is not applicable.

He would charge vat at 13.5% on all work done, irrespective off how much the parts or labour is.

Yes. You are correct. There is a concession for bona-fide car repairs.

http://www.revenue.ie/en/tax/vat/rates/decision-detail-04739.jsp