Vat Question

hussey

How does it work

if say I have a new company, and I bought a few products for my company, would I have to pay vat on them

or is that only for retail products??

Graham

It's a fairly involved process, and probably not worth it if you're only looking to save yourself a few quid.

In my experience, if your business doesnt exceed the thresholds:

€50,789 in respect of the supply of goods
€25,394 in respect of the supply of services

Then dont register, VAT returns aren't fun, and the Revenue Commission take a very dim view of late returns/payments etc etc.

For more info see http://www.revenue.ie/faqs/faq_vat.htm

Graham

Victor

Originally posted by hussey
if say I have a new company, and I bought a few products for my company, would I have to pay vat on them

If you set up, let us say, a small trading company or service company and say you buy stationery for €100, 21% VAT would be added (to make it €121). If you then sold €1000, in the VAT period (2 calendar months), you would add 21% VAT and seek €1,210 from your clients. You would then pay the Revenue Commissioners €189 (=€210-€21). If you paid more VAT than you received, in any given period, the Revenue Commissioners would reimburse you that amount.

Depending on your client base, registering for VAT may cost you money. If most of your clients (by value) are not VAT registered and your turnover is within the above limits, it makes sense not to register.

A very few (larger, export-orientated) companies do not have to pay VAT, but must have special clearance from the Revenue Commissioners, and must provide copies of it to their suppliers.

Originally posted by hussey
or is that only for retail products??

If you bought the above "retail" (in say Easons) it would be priced at €121 and you would claim it back in the same way.

heli

A very few (larger, export-orientated) companies do not have to pay VAT, but must have special clearance from the Revenue Commissioners, and must provide copies of it to their suppliers.

I am thinking about doing this, that is doing export-only business, wondering where do I start, what conditions must be met, etc?

Victor

Originally posted by heli
I am thinking about doing this, that is doing export-only business, wondering where do I start, what conditions must be met, etc?

Probably turnover in excess of €10m with more than 95% sales abroad or some such.

Specky

On the subject of the export oriented business you don't have to be large to get this status, it's just a matter of applying for it through the revenue.

I've dealt with several companies who are vat exempt and they certainly weren't in the €10m turnover league!

Victor is however probably correct in assuming you need to have more than a particular percentage of sales overseas to qualify. That's how the revenue work most such schemes.

It's simply a way of not penalising export companies by burdening their cashflow with vat that they're going to claim back anyway. It's no skin of the revenue's nose.

I'd actuall have a look at the mechanics of vat returns before you discount becoming vat registered simply because doing the returns is complex.

Personally I think the process is very simple.

You have to keep records...but you have to do that anyway.

The return is done only every two months.

Filling in the form requires you calculate 4 figures:

1. how much you've given to others in vat
2. how much you've received from others in vat
3. how much money you've "exported"
4. how much money you've "imported"

The last two figures are nothing to do with vat. You will also have to fill in an Intrastat form every two months (I recall) if you are a regular importer/exporter.

Work out the difference between the vat spent and the vat received and put it on the form. The revenue pays you back the difference (or you pay the revenue the difference if it's greater), then the revenue deposits (or deducts) the money from your bank.

It is really very simple to operate.

If you run computerised acounts (Sage, Tas etc) they generate the forms for you.

End of the year you have to do a summary...but you need to do all that anyway as part of your acounts.

Important things to think of:

If you're doing business with other EU countries then it's vat exempt anyway (you don't charge them vat and they should not charge you vat...if they do then tell them off and get a refund).

Don't underestimate the amount of money you're spending in vat, on fuel, phone, etc etc. VAT is for consumers!!! Not for businesses!! Get it all back by registering for vat.

OK, if you're registered then you have to meet your obligations (make accurate returns on time) or suffer the consequences, and you do have the potential of attracting a vat audit from the revenue (can be rather scarey).

But come on, if you're serious about being in business and you're in it for the long haul then you're probably going to get audited sooner or later anyway.

People not in business tend to get a bit scared of all the tax stuff, particularly vat, because the companies they work for have special people to look after it called "accountants". But it isn't complicated at all.

Mercury_Tilt

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