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Calculating VAT for online retail shop

  • 21-04-2015 9:07am
    #1
    Alittlebit
    Registered Users, Registered Users 2 Posts: 13 ✭


    Hi there,

    I'm in the process of opening an online store and just want to make sure I have my projections accurate in my business plan. I'm selling a subscription paper product which falls under the 23% Percent bracket.

    Now, if I'm correct, I pay 23% Vat to my wholesaler (in UK) on top of their price. If my business is registered for VAT, I can claim this back from the Irish government.

    I add 23% VAT to my resell price and give this directly to the tax man.

    Should I include VAT in my purchase price and sell price in my projected accounts or list these figures under a separate listing? Not sure which is less confusing come the end of the year.

    As in

    Cost:
    Paper product: €2.00
    + VAT @ 23%: .46c -Coming back to me
    =€2.46 cost per product at time of purchase

    Income:
    Paper product: €3
    + 23% Vat: €3.69
    .69c -Going to the Government

    Since the VAT I pay on my wholesale goods is coming back to me, should I account for it in my income section at the end of year?



    My apologies for the noobie question :/
    Thanks!


Comments

  • #2
    viztopia
    Closed Accounts Posts: 770 ✭✭✭viztopia


    If you are going to be vat registered then the UK supplier will not have to Charest you vat - intra eu acquisition.


  • #3
    Alittlebit
    Registered Users, Registered Users 2 Posts: 13 ✭Alittlebit


    Oh wow, so I just pay their wholesale price and add 23% to my own sales which I hand to the tax man, wonderful stuff.

    On top of this, I assume I don't have to charge VAT for customers outside the EU also?


  • #4
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    Er no - not quite!

    You have to charge yourself Irish VAT on the acquisitions, and then recover that charge at the same time. So it's self-cancelling; but Revenue can and do charge penalties on the tax that hasn't been charged properly - even if they're not due to receive anything else.

    The penalties for getting VAT wrong are based on the tax, and bear no relationship to profit, so it can be very expensive to make mistakes.

    If you're unsure, and it seems to me that you are, go and talk to an accountant and get a lesson in VAT compliance.


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