Including Gratuity on invoice?

NeptunesMoon

Hey, I gave customer final price of a job and they said "add X on top for a tip".

They need the tip included on the invoice, but rather than just adding it to the total and paying VAT on it, do I separate it or what?

I'm thinking something like this for example:

Service €100

Gratuity €10

VAT €13.5

Total €123.50

Then, in my book keeping, I put the sale down as €113.50, paying €13.5 VAT, and just note the tip, or do I put the sale down as €123.50 and put the tip at 0% or what?

cheers for any help :pac:

DaveJoyce

Hey



I have a few customers that have created a product, marked is as 0% VAT (or VAT Excempt) and then added it to the invoice.


This allows for better reporting for your accountant as it can be put into its own reporting category. You can then also get one total figure at the end of the year yourself


I have also seen other other customers put it between the VAT and Total and if you didn't want to go down the product line I would do it this way


What invoicing software are you using as sometimes they have an automatic option for this?


Regards
Dave

NeptunesMoon wrote: »

Hey, I gave customer final price of a job and they said "add X on top for a tip".

They need the tip included on the invoice, but rather than just adding it to the total and paying VAT on it, do I separate it or what?

I'm thinking something like this for example:

Service €100

Gratuity €10

VAT €13.5

Total €123.50

Then, in my book keeping, I put the sale down as €113.50, paying €13.5 VAT, and just note the tip, or do I put the sale down as €123.50 and put the tip at 0% or what?

cheers for any help :pac:

NeptunesMoon

cheers for the reply, this is more for a service, so it wouldn't be a case of having a product to list or anything and I don't do automated invoices

So it's correct not to add VAT onto the part that's gratuity so an invoice like I've set out above would be ok?

Galway56736

This sounds sketchy to me.

If the fee (100) is subject to VAT and the gratuity (10) isnt. (Total bill 123.50)

Why wouldnt people just flip them.... So fee (10) subject to VAT and the gratuity (100) VAT free - (Total bill 111.35)

Looks dodgy and open to abuse!!!

I think you need to charge VAT on the gratuity (or reduce it to include the VAT).

Trojan

I would strongly advise asking your accountant.

My (non-accountant) thinking is that you are almost certainly going to have to charge VAT on that.

DaveJoyce

I agree with this, as per the revenue site


https://www.revenue.ie/en/vat/vat-rates/search-vat-rates/S/service-charge-catering-food-and-drink-for-human-consumption-.aspx


If it is considered a service charge then it can be VATable





The Grautity may not require VAT paid on it, but it may be seen as a earning (that is why it should be recorded in a different reporting category) and may need income tax paid on it


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Dave

Trojan wrote: »

I would strongly advise asking your accountant.

My (non-accountant) thinking is that you are almost certainly going to have to charge VAT on that.

GreeBo

Just work out what X is before VAT and put that on the invoice and tax the total?