How does VAT work on services outsourced abroad (that are then offered to clients)?

loukee · 18-02-2015 02:37PM #1

Hi all,

If I run an agency and outsource abroad some of the services that I offer my clients here, how do I calculate the VAT?

Say the overseas company charges me €600 for client work and I plan on charging an end price of €900 to the client. Do I calculate VAT at 23% on the €600 or VAT on the €900 (or god forbid both)?

Thanks anyone - sorry if it's a ridiculous question!

And this might be another ridiculous question - can I put down the €600 the company charges me as a tax deductible expense? Or am I totally confused? Yes I am totally confused!

dbran · 18-02-2015 04:56PM

You charge VAT on the €900 to your customer. On your VAT return you put €207 in VAT on sales box.

You also have to charge your self on the services outsourced from outside the state at the rate of VAt that would apply to that service were it provided in Ireland. So at 23% you would add €138 to the vat on sales on your VAT return.

But you may be entitled to claim back this VAT provided the underlying services you provide are not exempt activities. Therefore you will add €138 to the vat on purchases box.

Thus the net vat payable to the revenue by you in the period would be €207.

Hope this is clear

dbran

loukee · 18-02-2015 07:23PM

Thanks dbran. Yep that makes things very clear. Thanks for the info

How does VAT work on services outsourced abroad (that are then offered to clients)?

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