Vat threshold, how much to charge, earnings

2022work

Hi, I know the vat threshold is 37.500 for sales/income. If one was to register for vat once they went over the threshold, how do they charge.

For example if I was to provide labor for private construction work which is 10k and provide materials for 3k(including 23%). Do I still pay the 23% vat on the materials bought then when issuing an invoice to the client's I then charge another 13.5 or 23% on top of everything.

Labor 10k

Materials 2310 + vat 690 (3000 total)

13000+ 13.5% vat(1755)

Total invoice= 14755

Another question. How much is one allowed to earn before having to pay 40% tax instead of 20%

Geuze

You don't charge VAT on VAT.

The VAT paid on inputs is deducted from the VAT charged on sales.

The net VAT is paid to Revenue.

2022work

https://www.boards.ie/discussion/comment/121183159#Comment_121183159

Can you explain it better.

If I'm vat registered, do I not pay the vat on the materials then charge 13.5% on top of the labor and materials then?

StevenToast

You really need to speak to a professional...

Geuze

https://www.boards.ie/discussion/2058316345/vat-threshold-how-much-to-charge-earnings

Labour = 10,000

Material = 2310

Total = 12,310

Add VAT to the 12,310.

You pay the revenue the VAT charged, less the VAT paid you paid on inputs.

WARNING: there are several rates of VAT, and sometimes different VAT rates on material and labour, I am not an accountant.

2022work

https://www.boards.ie/discussion/comment/121183467#Comment_121183467

Yes I understand although I'm sure it could be explained on here. It's not a difficult question really is it.

hold my beer

https://www.boards.ie/discussion/comment/121203583#Comment_121203583

It's explained in the post above you

2022work

https://www.boards.ie/discussion/comment/121203607#Comment_121203607

Your an idiot.

You might aswell just say to everyone in here who asks a simple question to seek a professional!

It's a simple question to answer for those who knows.

What I understand is that for building work the rate can be 13.5 for labor and materials if the materials are two thirds of the full amount.

If it's over the two thirds then it's 23%

What I want to know, if one is vat registered, do they still pay vat on the materials and charge it again or because they are vat registered, they don't pay it on materials but still charge it to the client.

Simple question to ask for those who know for this section of the forum. Is this not what this forum is for?

Geuze

Yes, VAT is paid on raw materials / inputs.

That VAT amount is then deducted from the VAT charged.

The net amount of VAT is remitted to Revenue.

That is why it is a tax on the "value-added".

hold my beer

https://www.boards.ie/discussion/comment/121206322#Comment_121206322

Not that post, the one literally above your one,by Geuze.

Also, if you want help around here you probably shouldn't call people idiots.

2022work

https://www.boards.ie/discussion/comment/121210312#Comment_121210312

Sincere Apologies! I read your post wrong :(

2022work

https://www.boards.ie/discussion/comment/121209584#Comment_121209584

But you said above that it isn't in your calculations.

Labour = 10,000

Material = 2310

Total = 12,310

Add VAT to the 12,310.

You pay the revenue the VAT charged, less the VAT paid you paid oni nputs.

Where as I had 2310 and another 690 in vat totaling 3000.

Geuze

What I want to know, if one is vat registered, do they still pay vat on the materials

YES, firms pay VAT on material inputs

and charge it again

YES

or because they are vat registered, they don't pay it on materials but still charge it to the client.

NO

Geuze

Here is an example.

Pub buys keg from Guinness at 100 euro plus VAT

The pub pays 123 to Guinness.

The pub adds a gross margin of 200 euro to the 100 cost [note the cost = 100 euro]

Value is now 300, to which the pub adds 23% VAT.

Price to customers is 369.

The pubs send Revenue 69 VAT less the 23 paid on inputs.

The pub sends 46 to Revenue.

The 46 VAT paid is 23% of the 200 euro value-added.

eire2009

How would commission work with VAT

Example for a holiday business, online retailer, management company

Customer pays 1000 inc VAT

Would the commission be on the 1000 or what the customer pays - VAT ?

2022work

https://www.boards.ie/discussion/comment/121216672#Comment_121216672

Interesting.

So with my example, builder/tradesman buys the materials from builders merchants and pays 23% on the materials then charges the client again more vat on top so really the government gets 36.5% vat on each job if the builder is vat registered then another 13.5% on top of the labor . I can see why some people would always choose the non vat registered tradesmen and get the materials themselves.

hold my beer

https://www.boards.ie/discussion/comment/121241764#Comment_121241764

They dont get that much. VAT charged by one business to another is reclaimed by the other company. And you can't just add percentages of two different supplies together and come up with a total VAT % for the entire project.

VAT is only really suffered by the general public, who can't reclaim it. On a building project that would be 13.5%.