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Offset tax phrase? What's that?

  • 21-05-2010 12:42pm
    #1
    Robrt
    Closed Accounts Posts: 11 ✭


    Hi,

    I just sent my invoice to my first client, but - aside from my VAT registration not being finished yet - they asked me to "you could also add the VAT explanation (Offset tax) phrase to the invoice".

    What's this? Has anyone heard of this?
    As far as I'm aware, I could bill them without VAT - they reside in a different EU member state and I provide business services from Ireland - exchange business ID / VAT numbers and that's that?

    (I realise I do have to talk to an accountant, but money's tight right now until they pay my invoice..)


Comments

  • #2
    wishful thinker
    Closed Accounts Posts: 78 ✭✭wishful thinker


    simply when you have a B2B transaction where one business (Vat reg) is based in Ireland and the other is outside Irl (but still in EU, Vat reg in their own country) you do not charge them Vat. They self account for it - this is known as "Reverse Charge"

    e.g.
    Net €10,000
    Vat 0% 0

    Gross €10,000

    Somewhere on the invoice "Vat accounted for by Reverse Charge by customer"

    VAT Rules have changed since 1/1/2010......I cannot say if your situation is exactly like above, as it depends on the what type of service/good you provide.


  • #3
    Robrt
    Closed Accounts Posts: 11 ✭Robrt


    Thanks wishful thinker; I did some further checking with the info you gave me, and you're right, it is a reverse charge.
    The client pays the VAT required to their local tax office and they offset it against their tax credits/debits at the fiscal year end.
    I'll still have to file quarterly VIES returns containing this info, though.

    More info is on: http://www.revenue.ie/en/tax/vat/leaflets/place-of-supply-of-services.html


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