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To Register For VAT Or Not.

  • 01-07-2025 10:42PM
    #1
    Lorne Malvo
    Registered Users, Registered Users 2 Posts: 195 ✭✭


    Hi all, I am currently working as a sole trader RCT for an hourly rate from a subcontractor. Just wondering is it worth registering for VAT or is it more beneficial to just claim the whole expense against income tax annually. Income about 70k.

    Which is more lucrative?



Comments

  • #2
    wally1990
    Registered Users, Registered Users 2 Posts: 1,233 ✭✭✭wally1990


    I think you might be misunderstanding this all

    But

    VAT registration is mandatory, not optional, because your income is over the threshold.

    You'll have to charge VAT on your invoices, but you can also reclaim VAT on your business expenses.

    Your principal contractor will deduct RCT from your payments, which acts as a credit towards your annual income tax.

    You can still claim all eligible business expenses against your income tax annually.

    Essentially, you have to register for VAT anyway, and you'll still claim expenses for income tax purposes.

    The principal contractor (in your case, the person paying you) must deduct RCT from your gross payments.

    The rate of deduction (zero, 20%, or 35%) depends on your compliance record with Revenue.

    Any tax deducted by the principal contractor will be automatically credited to your tax record by Revenue.

    This acts as a payment on account towards your overall income tax liability for the year and Repayments of any over-deducted RCT can only be made after the end of the tax year, once your tax return (Form 11) has been filed.

    VAT isn't your money. It's like a sales tax , it doesn't go against your income tax , that's your own personal tax on your earnings



  • #3
    Lorne Malvo
    Registered Users, Registered Users 2 Posts: 195 ✭✭Lorne Malvo


    You can still claim all eligible business expenses against your income tax annually.

    Is this minus VAT?



  • #4
    drunkmonkey
    Registered Users, Registered Users 2 Posts: 28,195 ✭✭✭✭drunkmonkey


    https://www.boards.ie/discussion/comment/123597529#Comment_123597529

    yes as you’ve already claimed the vat back, go talk to an accountant, a good one that won’t get you in trouble.



  • #5
    AtticusFinch86
    Registered Users, Registered Users 2 Posts: 362 ✭✭AtticusFinch86


    You won't need to charge VAT on invoices you issue to principal contractors. The Principal Contractor will need to self account for the VAT.

    On the same basis, if you are a Principal contractor, you will need to self account for VAT on any payments made to your subcontractors.

    On your VAT3, you can claim deductions for any VAT

    On your form 11, you can only claim deductions for the net (vat exclusive amount) amount of the expense.



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