Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Guidance from the Irish state revenue indicates that Irish VAT should be levied on these sales and you will have to register there. Turnover threshold for Ireland is currently 75K Euros in any one year. If you are exporting to an UK company also registered for VAT and you have their registration number then you include this on your invoice and the Reverse Charge will apply. As you post the sales you credit VAT output tax, but simultaneously debit VAT input tax thus making the transaction effectively zero rated. You would then at intervals invoice from Luxembourg charging the Duchy's VAT rate to cover all transactions. You would be well advised to set up an Irish subsidiary company and register it for Irish VAT to service these transactions. It would provide a most convenient solution.
I do hope that I have shown you a relatively straightforward process in these matters.
Correct, the Irish Government guidance is quite clear that if it is manufactured in Ireland and sold then Irish VAT applies.
Not quite! If you sell to an individual in the UK who is not registered then you invoice and charge and account VAT in the normal way. If you sell to an UK organisation registered for UK VAT you still invoice including the Irish VAT and quote the UK VAT number also on the invoice. You achieve an effective zero rating through your book keeping of the reverse charge transaction. However as far as the buyer is concerned they have a VAT invoice upon which they can claim back input tax quarterly in the usual way.
I do hope I have clarified the situation for you. The semantics are a pain, but don't please do not blame me, I did not create the whole silly system.
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Yes, because under the reverse charge system you will have inputs to offset the outputs.
Yes, the not registered transaction is processed as you surmise.
For the registered UK customer you have a reverse charge input tax to offset the output tax thus making the transaction effectively zero rated.
The UK customer will have to account for the tax in their book keeping. They will pay you for the VAT charged and will reclaim it as an input.
Simple, as the merkat in the TV advert would say!
1.Yes, they are the end user.
2. yes you would, but you would recover the VAT by the reverse charge input tax item.
4. Wrong, you would be invoiced gor the goods plus the VAT and pay the vendoe. You would recover the VAT as an input tax item in your accounts.
5. If you buy 100K of goods from the UK you will have to pay the UK vendor 20K of VAT. You will then reclaim this as an input VAT item. However, it is possible that on importation Ireland Customs might charge import duty (unlikely as it is another EU state) and Irish VAT. The former becomes a cost of sale, the latter can be reclaimed.
Thank you for your support.
VAT has no effect on the profit and loss account. They are merely debtors or creditors in book keeping terms an thus any outstanding balances at the end of an accounting period are merely a balance sheet item.
Let me have the figures and I will verify the tax treatment.
1. The customers who are not VAT registered are charged VAT which you have to pay to the Duchy. Those which are VAT registered you get relief from the output tax by the input tax under the reverse charge. The figure you quote as owing to the VATman is correct.
2. Correct, you would recover the 100K as input tax.
Delighted to have been of assistance.
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