Google AdSense - Do I need to pay VAT?

Pov06

Hey,

I currently own a site (fairly large community), not a business, not selling anything etc. Just a game server site.

I have decided to sign up for Google AdSense. This means that I have to place Google's ads on my site, and for every click I get a couple of cent.

Now the question is - do I have to pay VAT? EU's Google AdSense is located in Dublin, Ireland, and I am too.

This is what TOS of AdSense says for people with a payment address in
Ireland:

Publishers with a postal address in Ireland will likely have to charge Google Irish VAT if they are registered for VAT in Ireland. All payments are being made by Google Ireland, a company incorporated under the laws of Ireland, in accordance with the terms of your agreement with Google. The services provided are subject to the reverse charge mechanism and so VAT is to be accounted for by the recipient, Google Ireland, per Article 196 of Council Directive 2006/112/EC. Please speak to your local tax advisors if you have further questions .

If you are required to send an invoice for your VAT remittance, please follow the steps below. Make sure that you include ALL the required information , or we won't be able to accept your invoice.

I'm not registered for VAT, as it's not a business, but a community.

Please help me, I'm clearly stuck

Thanks!

RachaelVO

Yes you'll have to pay vat, whether you're registered for it or not.

You pay VAT everyday on shoes, sweets etc; and your not registered for it, so this is the same, the difference with being registered for VAT (and you have to have a certain income threshold) is that you claim back the vat on your purchases against the vat you charge on sales/services etc;

Pov06

So, how would I go around paying VAT? Does Google charge it before sending me the money or do I have to pay it myself?

Thanks again.

RachaelVO

Google will include the VAT in the amount that they charge you. I'm not 100% sure how they will do it, but they usually give you a way to pay per click, so if you choose .15c per click and you set a daily limit of say e10, so that e10 will probably have VAT charged on top of it (it could be inclusive, but I doubt it, it's usual that it's exclusive).

You can only claim the VAT back if you are VAT registered, ie you have your own business. If your site brings you in an income that you charge VAT on, and if it comes up to the VAT threshold then you can claim it back, if not (and I'm guessing not as it's a membership site) you just have to pay it like you do on everything you can buy in the supermarket (with the exception of milk, bread, potatoes, kids clothes and one or two other products and services).

Has that helped? I can waffle sometimes

jhegarty

No , you don't pay VAT.

If you were registered for VAT you would be required to charge google vat.

Pov06

Darn, 2 different answers.

I'm going to change this a bit.

I don't mind whether I pay VAT or not. The question is, will Google charge the VAT themselves?

The way this works is that I'm the seller to Google, and Google is the buyer, of ad spaces.

Would anyone have a guaranteed answer on this?

RachaelVO

jhegarty wrote: »

No , you don't pay VAT.

If you were registered for VAT you would be required to charge google vat.

Yes you do have to pay VAT whether you are registered for VAT or not if you are in Ireland. No question about it. The only way you DON'T have to pay VAT is if you or google was in another EU country and you were registered for VAT. If google charge VAT (and they do), they have to charge all Irish business and individuals VAT. The difference is that as a business registered for VAT gets to claim it back against the VAT they charge.

So OP, yes you have to pay it, and as you're not registered for VAT you can't claim it back. It's exactly like paying for a new pair of shoes. You're not registered for VAT, but you are still paying it! This is the same situation.

RachaelVO

Pov06 wrote: »

Darn, 2 different answers.

I'm going to change this a bit.

I don't mind whether I pay VAT or not. The question is, will Google charge the VAT themselves?

The way this works is that I'm the seller to Google, and Google is the buyer, of ad spaces.

Would anyone have a guaranteed answer on this?

Google are obliged to charge you VAT, and they inturn every two months pay that VAT to the revenue commissioners.

Now you are talking about putting google ads on your site, and in that instance you would be obliged to pay VAT on that income if you were registered and reached the threshold. However you are obliged to declare that income to the revenue commissioners

jhegarty

RachaelVO wrote: »

Yes you do have to pay VAT whether you are registered for VAT or not if you are in Ireland. No question about it. The only way you DON'T have to pay VAT is if you or google was in another EU country and you were registered for VAT. If google charge VAT (and they do), they have to charge all Irish business and individuals VAT. The difference is that as a business registered for VAT gets to claim it back against the VAT they charge.

So OP, yes you have to pay it, and as you're not registered for VAT you can't claim it back. It's exactly like paying for a new pair of shoes. You're not registered for VAT, but you are still paying it! This is the same situation.

Do you know what AdSense is ?

Media999

The answer is no. You dont have to do anything.

They just transfer the cash into your bank account and thats it.

Id advise you to start selling something on your site also. Feels nice to make a living off the net.

glic71rods46t0

RachaelVO wrote: »

Google are obliged to charge you VAT, and they inturn every two months pay that VAT to the revenue commissioners.

Now you are talking about putting google ads on your site, and in that instance you would be obliged to pay VAT on that income if you were registered and reached the threshold. However you are obliged to declare that income to the revenue commissioners

Rachel. did you read the OP? The OP was asking about VAT on income from the start - the only one who was confused about that was you and you ended up confusing the OP by offering facts on INPUT VAT

OP - as the other posters have said, just bank the money from Google. Remember though that the income you receive will necessitate a tax return (even if your costs outweigh your income) as you are technically carrying on a trade.

Pov06

Okay, so I don't have to pay VAT.

Now are there any limits to what I can earn in a year i.e if I go over the limit I HAVE to pay tax?

Thanks for all the help, I appreciate it.

Alan Shore

Well,
You are essentially providing advertising on your site. As long as your turnover does not exceed €37500 per annum you are not required to register for VAT. So you should inform google that you are not VAT registered and they will pay you NO VAT.

Does your second question relate to income tax. If so then you need to quantify what your income is. If you are getting €200 per year but it costs you €250 to run your site then no but if you are getting €2,000 then you need to consider registering. Are you putting all the revenue back into the site?

Pov06

Yes, all revenue goes back into the site, aswell as our Windows dedicated servers for our game servers. Actually we spent 150€ a month for the dedis alone, so I don't think I will make that much in a year from AdSense :rolleyes: