Tax - periodic accrual

shatter

Hello,

as I learn the Irish ways of taxation, questions arise ...

If I'm correct, me as a limited company has the following taxes and costs:

company:
company tax: 12.5% on profit (in my case maybe 25 because of some anti-avoidance legislature)
VAT: differs, max 21%

personal:
income tax: 20-42% on directors emoluments
prsi: 5%

I'm told that all taxes have to be declared and paid 2-monthly, with the exeption of VAT, if that is small. In that case it has to be declared and paid yearly.

Important for the calculation of the company profit (and thereby for the company tax) is, when the monies are to be counted in: on the date of issuing the invoice or on the date the money hits the account ... (invoice issued vs monies received).

So all in all that there is no need to keep money on your business account or take it off; rather the usage is what counts.

In one case I do not know how the profit/company tax calculation it is treated:
you receive money for an invoice in one two-month-period (period_1) and have to pay a bill connected to that invoice in the following period (period_2) ... maybe even in the next business year.
I would assume, as the invoice and corresponding bill are related to each other, that you could deduct the value of the bill from period_2 from the value of the invoice in period_1 and thereby lower the net profit for period_1 ... and pay less company tax ...

Is that so ... ?

Joachim

ck1

You confused me a bit in your last para..

Hope the following is of some use...

VAT is paid bi-monthly, declared on VAT 3 forms, I think the deadline date is the 17th of the month. You can of course choose to pay it monthly by Direct Debit and you pay the average of your annual bill and you then only have to do one VAT return.

PAYE/PRSI is paid monthly declared on a P30. You can also choose to pay this montly by DDI therefore cutting out the P30 and only have to do the P35 in February. It is important to monitor that your DDI are somewhat in line with your liabilities.

Corporation Tax - Companies file their annual return of income and gains no later than the 21st day of the ninth month after the end of their accounting period. Under the pay and file system companies should pay any balance of tax due at that time. For a company with an accounting period ending on 31st December 2004, it should file its CT1 no later than 21st September 2005 and pay any balance of corporation tax on the same day. Preliminary CT was introduced I think in 2002'ish on a fazed basis can't remember the exact % but I think the amount payable in 2005 is 72% and 90% in 2006. Balance is payable on the return date.

VAT is payable depending on which way you set this up with the Revenue either on an invoice basis or on a cash receips basis.

Victor

shatter wrote:

Important for the calculation of the company profit (and thereby for the company tax) is, when the monies are to be counted in: on the date of issuing the invoice or on the date the money hits the account ... (invoice issued vs monies received).

Corporation tax is paid annually (but you pay in stages). Small business (up to €500,000 turnover?) can operate on a "cash received" basis, i.e. they have no liability for a profit until they get paid by their client. Larger business will usually have to do it on an invoice issued basis.