VAT rate for supply of services with imported goods within the CEE.

bertie 56

Hello there,
I have a query for the VAT specialists here , through an example :


Mr Smith wants to call an Irish company to fit some German tiles in his house.


2 choices :


1) he buys himself the tiles, with the German VAT ( 19%) , and employ the Irish company to fit them ( at 13.5% )
Or

2) The Irish company buys the tiles, ( at 0% VAT , or better said ex VAT) , and fit them with a 13,5% VAT on material + services.


Question : Am I correct on the VAT rates ?


( we assume that the 2/3 rule doesn't apply in this example )


Thanks

adrianw

bertie 56 wrote: »

Hello there,
I have a query for the VAT specialists here , through an example :


Mr Smith wants to call an Irish company to fit some German tiles in his house.


2 choices :


1) he buys himself the tiles, with the German VAT ( 19%) , and employ the Irish company to fit them ( at 13.5% )
Or

2) The Irish company buys the tiles, ( at 0% VAT , or better said ex VAT) , and fit them with a 13,5% VAT on material + services.


Question : Am I correct on the VAT rates ?


( we assume that the 2/3 rule doesn't apply in this example )


Thanks

Unfortunately not.

From the purchase side, Irish VAT still applies under what is known as the ‘reverse charge’ method.

On the side of the tiler supplying to you, even if he/she did purchase tiles without VAT (which he/she doesn’t) from Germany, the 2/3 rule would still apply as it is based on the fees charged to you.

The EU does its best to ensure no business is disadvantaged simply due to the country in which they are established.

On a very tenuous link it would be the same approach as getting a car dealer to buy you a car in the UK and bring it into the Republic for you instead of buying it yourself.

bertie 56

adrianw wrote: »

Unfortunately not.

From the purchase side, Irish VAT still applies under what is known as the ‘reverse charge’ method.

On the side of the tiler supplying to you, even if he/she did purchase tiles without VAT (which he/she doesn’t) from Germany, the 2/3 rule would still apply as it is based on the fees charged to you.

The EU does its best to ensure no business is disadvantaged simply due to the country in which they are established.

On a very tenuous link it would be the same approach as getting a car dealer to buy you a car in the UK and bring it into the Republic for you instead of buying it yourself.

Thanks for your answer.
So, if I understand well , the tiler should apply a 23% VAT to the final customer on the goods

https://www.revenue.ie/en/vat/goods-and-services-to-and-from-abroad/acquisitions-from-other-eu-member-states/self-accounting-for-vat.aspx


But can't the tiller charges 13.5% VAT on the goods , since he will supply and fit them ?


( What I meant with " we assume that the 2/3 rule doesn't apply in this example" is that the price of the goods are less than 2/3 of the total price ( goods and labour).
Let's say goods : 100 € , labour : 500 € , for example )


Basically, what VAT rate will be charged to Mr Smith if the tiller buys the goods ?

El Grifo

If the tiler purchases the tiles, supplying his VAT number to the German supplier then he will be charged as an EU acquisition and will not pay VAT to the supplier. He will, instead, account for the VAT on the reverse charge. He will include the VAT on the tiles ( @23%; ) as part of his outputs and will simultaneously claim an input credit for that amount so effectively both cancel out on his net VAT payments.

Providing the tiles as a % of the total materials and labor VAT exclusive price to you do not exceed 2/3 of that amount, he then charges you 13.5% on the lot.

In your example €100 materials + €500 labor = €600+13.5% VAT = €681.

BarackTRAMP

To adrianw.
Tried to send you PM but your box is full.