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B2B Online Software Provider - Charging VAT?

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  • 15-04-2017 10:53pm
    #1
    Lostinspace
    Registered Users Posts: 234 ✭✭


    Hi there,

    I'm looking for some advice. I'm in the process of setting up a business. I will initially set up as a sole trader and eventually i will register as a limited company once the business starts to grow.

    The business will be a software as a service (SaaS) platform which will provide businesses in both Ireland and abroad an ability to use cloud based software for their business in return for a monthly or annual payment to my company. It will be a B2B service only.

    I understand that if I register as a sole trader that i am not obliged to register for VAT unless my turnover exceeds €37,500. So I'll take it that if I charge customers €20 a month for my software then i do not have to charge VAT, IF my turnover does not exceed €37,500?

    Another scenario...I register for VAT at the same time I register the business. If a company registered in Ireland wants to use my software then I have to charge 23% VAT on top of the monthly €20 fee? However, if the business is not registered in Ireland then i do not charge VAT?

    Thank you


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  • Options
    #2
    Johnmb
    Closed Accounts Posts: 2,150 ✭✭✭Johnmb


    Lostinspace wrote: »
    Hi there,

    I'm looking for some advice. I'm in the process of setting up a business. I will initially set up as a sole trader and eventually i will register as a limited company once the business starts to grow.

    The business will be a software as a service (SaaS) platform which will provide businesses in both Ireland and abroad an ability to use cloud based software for their business in return for a monthly or annual payment to my company. It will be a B2B service only.

    I understand that if I register as a sole trader that i am not obliged to register for VAT unless my turnover exceeds €37,500. So I'll take it that if I charge customers €20 a month for my software then i do not have to charge VAT, IF my turnover does not exceed €37,500?

    Another scenario...I register for VAT at the same time I register the business. If a company registered in Ireland wants to use my software then I have to charge 23% VAT on top of the monthly €20 fee? However, if the business is not registered in Ireland then i do not charge VAT?

    Thank you
    Whether sole trader or company, you don't have to register for VAT if you are below the €37,500 limit. You do have to register once it looks like you will go over that limit within the next 12 months (i.e. you don't get to wait until you hit the limit, you must register once it's clear you will hit the limit). You can opt to register even if you are not going to hit the limit.

    Once you register, you must charge 23% VAT to all Irish customers, regardless as to whether they are sole traders or companies, and regardless as to whether they are VAT registered or not. For EU customers, you must charge VAT if they do not provide a valid VAT number. If the do provide it then it is a reverse charge situation (you don't charge them, you just refer to the reverse charge on your invoice, and they account for it in their own country). If the customer is outside the EU, then it is an export, and 0% VAT applies.


  • Options
    #3
    Lostinspace
    Registered Users Posts: 234 ✭✭Lostinspace


    Johnmb wrote: »
    Whether sole trader or company, you don't have to register for VAT if you are below the €37,500 limit. You do have to register once it looks like you will go over that limit within the next 12 months (i.e. you don't get to wait until you hit the limit, you must register once it's clear you will hit the limit). You can opt to register even if you are not going to hit the limit.

    Once you register, you must charge 23% VAT to all Irish customers, regardless as to whether they are sole traders or companies, and regardless as to whether they are VAT registered or not. For EU customers, you must charge VAT if they do not provide a valid VAT number. If the do provide it then it is a reverse charge situation (you don't charge them, you just refer to the reverse charge on your invoice, and they account for it in their own country). If the customer is outside the EU, then it is an export, and 0% VAT applies.

    Thank you very much for your help. I've not heard of the reverse charge situation but I'll read up on it. Thanks again


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