The UK's 15% VAT rate and online retailing in Ireland

byrne0f56789

Is Ireland doomed as a location for start ups who sell online to other EU countries because our neighbours have reduced their VAT rate to the minimum under EU regulations?

If you sell direct to the consumer why would you locate in Ireland and have to pass on a 21.5% VAT rate when you could pop over the border and charge the 15% VAT rate on EU transactions. I haven't read anything in the news about this.

Skype and EBAY are two examples of companies who have located in Luxembourg to take advantage of the 15% VAT rate there. Remember 15% is the lowest VAT rate permitted by the EU.

I believe that the 6.5% differential between Ireland and the UK will kill B2C start ups here. I wonder if Irish B2C entrepreneurs will consider moving operations up North?

BenjAii

To be fair this country has enjoyed a huge advantage over other European countries in setting our corporate tax rate far lower, so it's not like we have missed out on using tax breaks to help employment.

Savman

6(.5)% is a huge difference, enough to make consumers look north or across the sea for their shopping. Ergo (look at me getting all matrixy), it's a good move by the Brits because it's sure to boost sales, even from international customers.

GerardKeating

byrne0f56789 wrote: »

Is Ireland doomed as a location for start ups who sell online to other EU countries because our neighbours have reduced their VAT rate to the minimum under EU regulations?

Depends of what one is selling, if goods, they normally one charges the VAT in the customers country, hence if one orders from Amazon, one pays Irish VAT.

Services are different, which is how Sky get away with Luxembourg.

byrne0f56789

GerardKeating wrote: »

Depends of what one is selling, if goods, they normally one charges the VAT in the customers country, hence if one orders from Amazon, one pays Irish VAT.

Services are different, which is how Sky get away with Luxembourg.

The one damper on the UK's VAT rate is that it probably won't last very long. As a result, I don't see any Irish business locating up north to sell digital products/services within the EU. However, as a result of our high (new) 21.5% rate I can't see Ireland suddenly becoming a location of choice to start up the next Skype.

sm.org

GerardKeating wrote: »

Depends of what one is selling, if goods, they normally one charges the VAT in the customers country, hence if one orders from Amazon, one pays Irish VAT.

Services are different, which is how Sky get away with Luxembourg.

So if I'm based in Ireland and selling to American customers I'd charge the sales tax set by the particular State or is it Irish vat rates?

GerardKeating

sm.org wrote: »

So if I'm based in Ireland and selling to American customers I'd charge the sales tax set by the particular State or is it Irish vat rates?

Exports (to outside the EU) are zero rated for VAT...

So no different in which EU country one would be..

Tony

Its a huge competitive disadvantage for retailers here. On the one hand our minister for Finance bemoans the fact that people shop in Northern Ireland and then he gives them more reason for doing so. Monumental stupidity, this may well mean less revenue for the state and not more.