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Correct VAT treatment of software purchases from US

  • 15-02-2011 6:20pm
    #1
    fizzy
    Registered Users, Registered Users 2 Posts: 286 ✭✭


    I've recently registered for VAT. I make websites and regularly buy software components for them online, usually from US websites.
    There is never any mention of VAT on the receipts I get - they just seem to charge the same amount to customers worldwide.

    However, I've been reading up on VAT on the Revenue website and I think that such software purchases would be seen as receipt of fourth schedule services, and that I would need to account for the VAT myself.
    If this is correct, I understand that I would just be showing a VAT 'charge' of X and claiming a VAT 'credit' of X on the VAT return which would cancel each other out.

    BUT I'm very confused about how I would treat these US purchases correctly in my accounts (I use Quickbooks). What VAT code do I give them?
    I previously thought I could just treat them as outside VAT, which would not add any VAT on.
    However if my reading of the fourth schedule info is correct, do I need to give them a 21% VAT code instead? But, if I do that, the amount shown in the accounts software will be COST + VAT, whereas my bank account will only show an amount of COST because no VAT was ever paid out in the real world.

    If anyone could help clear this up for me, I'd really appreciate it. I'd imagine these kind of expenses must be quite common these days, so I'm hoping it will be feasible to handle.

    Thanks for your time.


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