VAT on electronic services

omegawkd

Hello,

Firstly sorry if this has been already asked and answered - I couldn't find anything relevant.

Secondly sorry if this is in the wrong forum, please feel free to move it where is relevant.

To the issue:

I am unsure about VAT on a number of transactions I have each month. One such transaction is online backup services (JungleDisk.com) and the other is DNS services (Zerigo.com).

Basically their invoices to me, or rather simply lines in an email, don't outlay any TAX information or VAT and I cannot receive them in Euro either; they only issue in US Dollars.

For instance, one such payment came to US$10.01 which converted to €8.01. Do I say NIL as the VAT amount? Or do I treat the Euro value as including/excluding VAT.

It would seem strange to me to say that the Euro value excluded VAT and required VAT to be added but from what I have read it seems to be the way - that I am virtually paying more money, the VAT value, than I actually did.

I most likely am wrong though in my interpretation so do correct me if I am.

Thanks for your time.

MBateson

Hi,

Sounds like 4th Schedule Services, you need to know exactly where your customers are based and whether they are businesses or not. Check out the links below and see if they help. There's a table there that should be helpful. Make sure your services qualify as 4th SS.

http://www.revenue.ie/en/tax/vat/leaflets/fourth-schedule-services.html

and this which links off from the link above as it is new rules

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

You'll probably need to lodge VIES returns as well so register for that. It's just information gathering on the services being exported from the country. There's a potential fine for not registering.

This won't fully answer your questions but might help.

omegawkd

Thanks for the reply.

While helpful it did not resolve my actual issue; partly my fault there.

I should of mentioned that the services I avail of are not directly supplied to customers of mine; more so they are services I require to make business.

The backup service is used internally within my business and is not sold on to customers; although I do have a reseller account to white label services. (In that sense I would be offering the services but using JungleDisk to create that service)

In much the same way, the DNS service is required for my server to allow web requests. I don't sell on the DNS services per say directly, more so it just is part of the package as is required.

[Basically I do not charge for these to customers as you would passing a product from a supplier to a customer; I use these services, internally, to create business]

So my question is specifically about the charge to me, only, from those suppliers, who in this case happen to be in the US.

MBateson

Hi,

This is probably more relevant then http://www.revenue.ie/en/tax/vat/leaflets/eservices-and-broadcasting.html#section3

As far as I can tell, your US supplier should have registered for VAT in the EU. Once they've verified you're a VAT registered business, they don't charge you VAT but you need to account for it using the Reverse Charge.

Basically, you multiply the amount of your imports by 23% and add it to your VAT on sales and VAT on purchases figure (where it cancels each other out) and include on your VAT return.

There's an appendix of examples of services listed at the bottom so you should check those against it.

Obviously, you should double check this with your accountant.

smeharg

MBateson wrote: »

Hi,

This is probably more relevant then http://www.revenue.ie/en/tax/vat/leaflets/eservices-and-broadcasting.html#section3

As far as I can tell, your US supplier should have registered for VAT in the EU. Once they've verified you're a VAT registered business, they don't charge you VAT but you need to account for it using the Reverse Charge.

Basically, you multiply the amount of your imports by 23% and add it to your VAT on sales and VAT on purchases figure (where it cancels each other out) and include on your VAT return.

There's an appendix of examples of services listed at the bottom so you should check those against it.

Obviously, you should double check this with your accountant.

Almost right.

The US supplier is only obliged to register for EU VAT if it is supplying non-VAT registered private individuals.

Electronic services supplied by a non-EU business to an EU business are liable to Irish VAT. However, the recipient pays the VAT using the reverse charge mechanism described above.