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VAT Question

  • 03-07-2009 9:20am
    #1
    Penrose
    Closed Accounts Posts: 126 ✭✭


    Hi there

    I recently started a business, I own a dating website, membership is €10 a month and I plan to sell advertising for €100 a month.All my trade is within Ireland.

    My Turnover will be around 30K a year and I do not employ any employees.

    I have some questions which I am unsure on.

    Do I need to register for VAT?
    Do I need to charge my customers VAT?

    If I do register for Vat can I reclaim Vat on cost of web design or the purchase of goods such as printers ?


Comments

  • #2
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi Penrose

    You do not need to register for VAT as your income is below the threshold for registration. You may opt to register if you wish though and there are some schools of thought which say you should as it gives an air of permanence and establishment about your business.

    Whether you charge VAT to your customers depends on where they are situated. If they are outside the EU then there is no VAT chargable. Within the EU, if they are individuals then Irish VAT will be chargable, if they are businesses and you get their valid VAT number, no VAT is chargable.

    You can claim back the VAT on you purchases if they are incurred after you are VAT registered.

    Hope this helps.

    DB


  • #3
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    Commercially speaking, I think it would significantly impact on your margins if you were to become vat registered. It would reduce your revenue by around 18 percent.

    You could claim for the cost of things like printers, but this would be a very small saving.

    Of course, you have to plan for the long term future of your business as well as the present reality. Presumably you intend for the business to expand. For this, the tax planning is more complex.

    Best,

    Antoin.


  • #4
    RUDOLF289
    Registered Users, Registered Users 2 Posts: 794 ✭✭✭RUDOLF289


    Hello Penrose,

    According to the most recent VAT guide, registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve-month period. For a person or company selling or supplying services the threshold is Euro 37500.

    The point that antoinolachtnai makes is a valid one. If you register for VAT you will have to remit Euro 1.77 per subscription sold to the Revenue and Euro 17.70 for each add sold. That is provided you sell at Euro 10 and Euro 100 respectively and do not add the VAT. NB : For the purposes of calculating your turnover, the VAT is not included.

    Considering that at Euro 30000 turnover you are not that much below the threshold, you may need to consider registering for VAT. Bear in mind that the threshold is for "any twelve month period". I would recommend to take some advice from an accountant to make sure you look at all the implications and take the appropriate steps now.

    Best of luck with your venture

    Regards,
    Rudolf289


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