European VAT

mikdem

Hi All,
I'm working in Ireland with my Italian small firm, I need to by a new PC.
I was told by my Italian accountant I need an European invoice without any VAT, then I've to do the VAT reverse charge in Italy.
My problem is I asked some shops in Dublin and they don't agree, the say I've to pay the full VAT and then claim it back (at the airport). I think they are mistaken it as if I was a tourist.
How is the correct procedure?
tks all
Mike

barneystinson

mikdem wrote: »

Hi All,
I'm working in Ireland with my Italian small firm, I need to by a new PC.
I was told by my Italian accountant I need an European invoice without any VAT, then I've to do the VAT reverse charge in Italy.
My problem is I asked some shops in Dublin and they don't agree, the say I've to pay the full VAT and then claim it back (at the airport). I think they are mistaken it as if I was a tourist.
How is the correct procedure?
tks all
Mike

Your Italian accountant is correct. As long as the Italian company provides a valid VAT registration number and the vendor is satisfied that the supply is a "business to business" transaction, then an invoice at zero rate of VAT can be issued.

mikdem

Hi barneystinson,
tks for your answer, it is exactly what I need.
would be legen..dary if you could give me something more precise to tell to the guy at the shop, do you have any doc from tax agency or something..

tks again

Mike

RUDOLF289

Hello Mikdem,

I am afraid I have to disagree with Barneystinson. According the the 2008 VAT Guide, the following applies to Intra Community supplies (i.e. the shop selling you the PC

5.2 Supplies of goods to other EU Member States
The supply of goods by a VAT-registered trader in one EU Member State to a VAT-registered trader in another EU Member State normally qualifies as an intra-Community supply. A VAT-registered trader in the State may zero-rate the supply of goods to a customer in another EU Member State if:
• the customer is registered for VAT in that other EU Member State,
• the customer’s VAT registration number (including country prefix) is obtained and retained in the supplier’s records,
• this number, together with the supplier ’s VAT registration number, is quoted on the sales invoice,
• the goods are dispatched or transported to that other EU Member State.

5.3 Evidence of dispatch to another Member State and removal of the goods from the State
The precise commercial documentation required to confirm dispatch and removal of the goods from the State depends on the particular circumstances involved.
In many cases a supplier arranges transportation of the goods and the normal commercial documentation related to the supply and transportation of the goods is available (e.g. order document, delivery docket, supplier’s invoice, transport document/bill of lading,evidence of transfer of foreign currency for payment etc.). In such cases the supplier should retain this documentation.
Where transport of the goods is arranged by the customer, or the goods are taken away by the customer using his or her own transport, the supplier needs to be satisfied that the goods are dispatched or transported to another EU Member State.The normal documentary evidence should be retained in relation to the sale itself but, in addition, the supplier should obtain and retain documentary evidence from the customer that the goods were received in another EU Member State. The type of documentation
acceptable includes transport documents, copies of warehouse receipts, delivery dockets etc. It might also be prudent for the supplier to record details of the means of transport (e.g. vehicle registration number) used by the customer. Special care should be taken by the supplier to ensure that the four conditions outlined in paragraph 5.2 are met for sales and deliveries of goods to other EU Member States. Some examples of where a
doubt can arise are where the:
• customer is not previously known to the supplier,
• customer arranges to collect and transport the goods,
• customer’s transport arrives at supplier’s premises without advance notice or correspondence,
• payment is made in cash,
• type or quantity of goods being purchased are not consistent with commercial practice bearing in mind the purported destination of the goods.
Cases where one or more of these various factors combine together must be treated with particular caution.Where a doubt arises, the supplier should charge Irish VAT. If the conditions for zero-rating are subsequently established the customer is entitled to recover the VAT paid from the supplier.

In my view, since you are buying the goods in Ireland, for use - in the first instance - in Ireland and since you can not furnish proof that the goods are transported to Italy, the retailer has absolutely no choice but to charge and collect Irish VAT.

Now, your company can reclaim the VAT paid in Ireland. There is a procedure for it. This is what the VAT Guide says ;

1.17 Repayment of VAT to foreign businesses
In general, persons who are engaged in business outside the State but who are not engaged in business in the State are able to claim a refund from Revenue under the terms of the EU 8th and 13th VAT Directives of VAT charged to them in respect of services and goods supplied to them in the State for business purposes, where the VAT would be deductible by them if they were accountable persons in the State (see paragraph 10.6).VAT may not be reclaimed in respect of goods or services supplied within the State (other than certain services for which the person who receives them self-accounts for the VAT due) or in respect of motor vehicles of a kind referred to in paragraph 10.9 for hiring out for utilisation
within the State. Applications for refunds of input VAT should be made to VAT Repayments (Unregistered), River House, Charlotte’s Quay, Limerick.

Hope that helps you in resolving the VAT issue

Cheers,
Rudolf289

mikdem

Tks Rudolf289 for your answer,
I know there was something new in 2010 regarding European VAT, do you think can be possible something changed last year?
If it is as you said, do you have any experience in claiming back the vat? I mean my vat will be around 300E, do you think I can really have it back in reasonable time and with no experience on Irish procedures?

tks all for the answers

Mike

barneystinson

mikdem wrote: »

Tks Rudolf289 for your answer,
I know there was something new in 2010 regarding European VAT, do you think can be possible something changed last year?
If it is as you said, do you have any experience in claiming back the vat? I mean my vat will be around 300E, do you think I can really have it back in reasonable time and with no experience on Irish procedures?

tks all for the answers

Mike

Rudolf is totally right (assuming the PC is for use in Ireland, which I'm sure from your OP it is - egg all over my face after my incorrect advice earlier, but in my defence it was a long weekend!).

The only change in 2010 that affects you in this transaction is that your claim for a repayment of the Irish VAT charged on the PC will have to be submitted electronically by your Italian accountant through the Italian Revenue authority (so the very last bit of Rudolf's quote, with the address in Limerick, is no longer applicable). The good news is that I presume the refund will issue faster as a result of it now being an online process...

RUDOLF289

barneystinson wrote: »

Rudolf is totally right (assuming the PC is for use in Ireland, which I'm sure from your OP it is - egg all over my face after my incorrect advice earlier, but in my defence it was a long weekend!).

The only change in 2010 that affects you in this transaction is that your claim for a repayment of the Irish VAT charged on the PC will have to be submitted electronically by your Italian accountant through the Italian Revenue authority (so the very last bit of Rudolf's quote, with the address in Limerick, is no longer applicable). The good news is that I presume the refund will issue faster as a result of it now being an online process...

Hello Barneystinson,

that's great. I knew there were some changes in 2010 but hadn't worked through them. Thanks for adding this to the post so that Mikdem has the latest info available.

Cheers,
Rudolf289