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VAT - Help on Purchase Costs & Sales Price & VAT

  • 30-11-2017 1:16am
    #1
    shinju
    Closed Accounts Posts: 81 ✭✭


    Slightly confused on this one, so require a bit of assistance.

    I purchase product from a distributor.
    They quote a price of € 5215 ex VAT.
    I place an order of € 5215.
    I guess i don't pay them VAT if i have a VAT number?

    I then sell the product on to the end customer with a 25% Markup: € 5215 +25% = € 6518.75

    I would then add VAT @23%, i.e: € 6518.75 +23% = € 8018.06

    Is the above correct?



Comments

  • #2
    drunkmonkey
    Registered Users, Registered Users 2 Posts: 28,340 ✭✭✭✭drunkmonkey


    You pay the vat to the distributor you then pay the difference of the vat you collected from the customer less the vat you paid to the distributor and vat you incurred in the cost of sale eg fuel, electricity etc to the vat man.
    The way your calculating profit is correct as you don't include the vat paid to distributor.


  • #3
    shinju
    Closed Accounts Posts: 81 ✭✭shinju


    drunkmonkey wrote: »
    You pay the vat to the distributor you then pay the difference of the vat you collected from the customer less the vat you paid to the distributor and vat you incurred in the cost of sale eg fuel, electricity etc to the vat man.
    The way your calculating profit is correct as you don't include the vat paid to distributor.

    Thanks! That makes sense now!
    The ultimate effect is the same, but one has to account for balancing of VAT paid vs charged before profit (markup) is realised.
    That's a bummer!


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