Another Intra-EU VAT Question (Simple one!)

JohnCleary

i all,
Can anyone confirm the following, I have simplified the numbers.

I purchase a product from UK (0% VAT - All OK with reverse charging etc. for VAT3): 2,000 eur

I provide support for this product: 6,000 eur

My VAT for service is 13.5% (Confirmed with Revenue)

So, I charge the customer a total of 8,000 eur + 13.5%, correct? (2/3 rule)

I know if the product was over 2/3, I charge 23%, i'm just confused how it works the other way round.

Many thanks.

Stratvs

You’re correct. ( taking as you said that your service is a reduced rate one )

If the value of the materials exceeds 2/3 of the total price for materials and labour then the standard rate applies.

If the value of the materials is less than 2/3 of the total price for materials and labour then the reduced rate applies.

Some people look at it the other way, if the value of the labour exceeds 1/3 then the reduced rate applies. But the 2/3 rule is intended to be read from the standpoint of the materials.

Of course there are the exceptions such as auto batteries and tyres and appliances in fitted kitchens which always carry the standard rate even where charged as part of a bigger job with large labour element ( with further exception for Aga type cookers which can be reduced rate provided installed as part of heating system ). Who said VAT was easy

JohnCleary

Thanks for the confirmation.

I am not selling tyres or AGA's!!