VAT info

Mcfecked

Apologies if this is a stupid question, but any help is appreciated.

If a business was to import a product into Ireland from within the EU for resale in Ireland, what is the VAT implication?

Let's say the product is bought for €1000. The business pays €230 vat on that cost. The same product is then sold for €1500 + VAT (€345). My question is: Is the business required to pay both amounts of VAT to revenue (€575) or can one be claimed back against the other, meaning the business pays the difference (€115)?

Apologies again if this is a bit basic for the forum.

Thanks.

Allinall

There should be no VAT on the purchase, once the supplier in the EC quotes the purchaser’s VAT no. On their invoice.

mrslancaster

It depends on whether the imports are B2B or B2C, there are different rules. Your accountant will have the information.

In b2b, when Vat registered businesses in EU countries dispatch goods to another EU state it's an Intra-Community supply and is usually zero-rated. It means businesses don't have to register in every country where they make a supply and the buyer of the I/C goods records the VAT transaction, not the seller.

For an I/C supply, the supplier invoice should show both VAT registered numbers and say it is an I/C supply at 0% VAT. Businesses need to keep two items of evidence to confirm transport/ dispatch of the goods.

The Irish business accounts for the VAT at the Irish rate applicable when the goods are acquired and any entitlement to input credit is reclaimed in the same VAT return. So the buyer declares both the purchase Vat €230, and the supplier’s sale Vat €230 in the return so the vat transaction is NIL. The I/C details are also included at E1 & E2 on the Vat return.

The business accounts for their sales vat €365 in the normal way.

mrslancaster

https://www.revenue.ie/en/vat/accounting-for-vat/how-to-account-for-value-added-tax/how-do-you-complete-a-vat3-return.aspx