Anyone can answer this question regarding VAT?

infoinfoinfo

Hi,

I would be very happy if someone knew answer to my question below.

I am registered Sole trader in ROI, registered for VAT. Run a website where i sell products for other companies. I act as an agent for the companies. When i sell their product, i keep commission of the sale and the rest goes to company.

Example is : i sell 10 products for 10EUR each. I receive 100 EUR. I keep 30 EUR as commission. I pay 70EUR to company.

As VAT registered, am i responsible only for my 30 EUR ( and have to pay tax on this). The 70 EUR is company's responsibility? because this 70 EUR is their money but i receive them via my website.

I am very confused on how to do this correctly.

Any help appreciated.

Thank you!

TheChizler

It looks like you're basically reselling products, are you handling the customer's transaction?

infoinfoinfo

Hi, yes i take payments on my website. Then transfer part to company who delivers products.

Thanks for any advise

TheChizler

infoinfoinfo wrote: »

Hi, yes i take payments on my website. Then transfer part to company who delivers products.

Thanks for any advise

If you were acting as an auctioneer it looks like you would only be liable for your portion of the sale: http://www.revenue.ie/en/tax/vat/leaflets/auctioneering.html
But it doesn't sound as if that's the case.

It looks like it's addressed here. http://www.revenue.ie/en/tax/vat/guide/supply-of-services.html#section12
Can't really pick out your situation, if you're an intermediary or not. In either case you only have to register for VAT if the amount you're liable for exceeds the threshold. Think it's about €70,000.

That said it would be no harm to get professional advice.

infoinfoinfo

Yes, thanks for that.

I think in general my situation can be best compared to what for example Groupon does. They sell stuff for someone else and then keep commission.

So i was wondering how they do taxes for these deals they offer. I think it is almost the same principal.

And the company who receives amount from them, do they get VAT invoice?

I was researching on how they do it, but could not find much.

Thanks for any advice!

Alan Shore

If you are acting as an agent the the treatment depends in whether it's clear to customer that you are the principals agent or not.

Have a read of http://www.pearse-trust.ie/blog/bid/73229/VAT-Agents-Disclosed-And-Undisclosed

infoinfoinfo

Many thanks!

But as per below, i should be responsible for VAT on that 70 EUR that goes to company (principal)? That is a bit strange.

"The agent must treat the sales of its Principal's goods or services as if it had bought them from the Principal and sold them to the customers (with the purchase price being the sales price less the agent’s fees / commission). The agent must account for VAT on these sales in accordance with the place of supply rules."

That would mean that i am responsible for 100 % on 70 and the 30 as well. But the company is selling via me(agent) so they need to be responsible for what they receive for the sales, and that would be the 70 EUR, or no?

infoinfoinfo

I think i would fall more under Disclosed Agent where principal is responsible for their part and i am for my service charge (commission).

Mr. Incognito

You will be responsible for the vat on the full sale price not just your commission.

This is general advice. Contact your accountant for personalised advice. If you dont have one get one.

Read the guide to vat in the stickies

Alan Shore

Are you in business in your own account and you sell products to the end customer through you own website joeblogs.com? I go on there and buy a widget and I really don't care that you don't have it in stock or if fact that you never have it in your own warehouse, I pay you the €100! So you have to account for the sale of €100.

You will then get the principal to fulfill your delivery directly and they will invoice you for the €70 Inc VAT. As you are registered you can recover the VAT. So your profit is the difference between the €100 and €70 less the VAT.

infoinfoinfo

So you are saying, my profit is 30 less the VAT from 100 ( which is 20), so my profit is 10?

I don't really think that for example Groupon is having it this way. That is very strange and i am still not sure. As i have read VAT info for business that acts as Disclosed agent selling goods or service on behalf of principle, principle is then responsible for the part of the sale they receive and agent for taxes on commission. Can it not be this way?

infoinfoinfo

or i pay VAT on the 70 they invoice me? so 30 less 14?

CIARAN_BOYLE

Look at the invoices you receive

Most likely if you are invoiced for 70 that will include vat at 23% which you can use as an input credit.

Mr. Incognito

Vat and profit are not related

If vat is eating two thirds of your costs register for vat and you can reclaim any vat you are charged

You can register with any turnover level

Read the guide to vat.

antoinolachtnai

Came across this one before.

Normally, you collect VAT from your customer on the entire amount of the purchase.

But there is an exception, where your suppliers are not VAT registered or are VAT-exempt (there is a technical difference). Have a look at the margin scheme. It mainly applies to second hand goods, but as I understand it, it is not only second-hand goods.

http://www.revenue.ie/en/tax/vat/leaflets/margin-scheme-second-hand-goods.html

Obviously this only applies where the person supplying you is not VAT registered. If they are VAT registered, you should pay the VAT and then count it as input VAT.

You really should get some accounting advice to make sure you are accounting for this correctly.