Merchant services VAT

baldtooyoung

Not sure if right thread,I think it is.

Hello all,
Soon to be a newbie to selling online.the product I will be selling in the beginning is a childrens book so there is no vat on that.

It would be magic if sales reached 37k but they won't so I won't need to pay vat or register.

In order to sell online I will be using stripe because it's cheaper.they charge 1.4% plus 25cent and vat on the price of the product.

Can I claim this vat back?

Complete newbie to all this and learning a lot as I go.I just need to put my mind at ease about this.hope someone can help.

Rulmeq

You can only claim (and charge) VAT if you are registered for VAT. Having said that, I think it's unusual for them to charge VAT on transaction charges, have you taken a look at Elavon (although they have a minimum monthly service charge that they charge VAT on, so probably won't work out any cheaper).

I think you don't have to reach the figure to register for VAT, so if you think it's worth your while then go for it (You're going to be registering for ROS anyway to submit your Form 11 and such, so one more registration isn't much more work), if you're going using an accountant just check with them to see if you can.

baldtooyoung

Rulmeq wrote: »

You can only claim (and charge) VAT if you are registered for VAT. Having said that, I think it's unusual for them to charge VAT on transaction charges, have you taken a look at Elavon (although they have a minimum monthly service charge that they charge VAT on, so probably won't work out any cheaper).

I think you don't have to reach the figure to register for VAT, so if you think it's worth your while then go for it (You're going to be registering for ROS anyway to submit your Form 11 and such, so one more registration isn't much more work), if you're going using an accountant just check with them to see if you can.

Thanks very much for your reply. Elavon,like many other merchant services want a monthly fee and a transaction charge. Well worth it if you can sell a lot of product but I'll be small fry for a while anyway.(only a small while,fingers crossed!)

See the thing that is good about stripe is no monthly fee,so if I sell my product for €10,it's 39cent to them.that's brilliant. But you add vat of 2.30 and 2.69 is a chunk of change out of a tenner.

I will ask an accountant for the definitive answer on Monday,

Rulmeq

If they are charging you VAT it would only be on the transaction charge (so in your example 1.4% of €10 = 14c + 25c = 39c * 0.23 = 9c (8.9 rounded). It's really not a big deal. However if you would like to purchase stuff for use by the business, then being registered is very handy. It does mean you need to file a VAT return every 2 months (after the first year, they will let you do it every 4 months if you're small, or you can even get it down to 1 per year if you are willing to pay by direct debit I believe, and since you would not have any VAT on sales, only rebates that shouldn't be difficult).

Revenue's page on VAT: http://www.revenue.ie/en/vat/index.aspx

baldtooyoung

Rulmeq wrote: »

If they are charging you VAT it would only be on the transaction charge (so in your example 1.4% of €10 = 14c + 25c = 39c * 0.23 = 9c (8.9 rounded). It's really not a big deal. However if you would like to purchase stuff for use by the business, then being registered is very handy. It does mean you need to file a VAT return every 2 months (after the first year, they will let you do it every 4 months if you're small, or you can even get it down to 1 per year if you are willing to pay by direct debit I believe, and since you would not have any VAT on sales, only rebates that shouldn't be difficult).

Revenue's page on VAT: http://www.revenue.ie/en/vat/index.aspx

Thanks very much.must have read that link above 5000 times by now,haha.
I thought VAT was charged on the transaction too,in the email I got off one of their reps he made out the calculation that it was off €10!

My brain is a bit fried from the whole thing.

Rulmeq

I've a feeling you've misunderstood them. If they were to charge VAT on the goods, then it would be charged on top of the €10, not taken out of the €10, also they would be converting a zero rated product to a 23% product, which is not really fair, and also means they would be charging 23% on top of all products including products that already had VAT charged (the final price charged to the customer includes any VAT).

The only thing they can charge VAT on is their charge(s) (and like i said, i didn't think Elavon charge VAT on the fees, but I could be wrong on that one, it's been a while. I know they charged it for terminal rental fees, etc.).

baldtooyoung

Rulmeq wrote: »

I've a feeling you've misunderstood them. If they were to charge VAT on the goods, then it would be charged on top of the €10, not taken out of the €10, also they would be converting a zero rated product to a 23% product, which is not really fair, and also means they would be charging 23% on top of all products including products that already had VAT charged (the final price charged to the customer includes any VAT).

The only thing they can charge VAT on is their charge(s) (and like i said, i didn't think Elavon charge VAT on the fees, but I could be wrong on that one, it's been a while. I know they charged it for terminal rental fees, etc.).

Thanks exactly what I thought too.I will attach part of email I got the other day.I questioned it too but still waiting for reply. I reckon it's a mistake alright,lt would have to be.

Rulmeq

Wow, it really looks like they are trying to charge you 23% of the entire amount. I'd find a different processor if I were you.

baldtooyoung

It really does! I hope it was a mistake.I'll just have to wait until Monday for a reply.thanks very much for all your help.

baldtooyoung

As I thought and prayed it was a mistake.it's vat on there fees. Happy days!

Rulmeq

Cool, glad it worked out. Thanks for the update too.

paul71

Financial services = no Vat
Rental or fixed charged associated with the hardware = Chargeable