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VAT on top of income tax?

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  • 12-11-2020 12:01am
    #1
    NotAnotherOrange
    Registered Users Posts: 61 ✭✭


    I've recently been told that I have to register and start paying VAT at 13.5%

    I'm paid through PAYE for one job, but I earn money on the side through YouTube which is where the VAT comes into play because it's gone above the threshold.

    My question is do I have to pay VAT on top of the 51% income tax (40% income, USC and PRSI etc). 51% is what I pay on everything I earn outside of my PAYE job.

    So if I earned 100,000 for example.

    Would I pay 13,500 in VAT AND 51,000 in tax?

    Or does the 13,500 paid in VAT come off the final bill at the end? It sounds to good to be true so I'll assume not.

    I can't "charge" VAT on most of the way I earn money as it isn't invoiced. So this is now an extra charge and potentially meaning I have to pay 64.5% on everything I earn.

    Cheers


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    #2
    techguy
    Registered Users Posts: 2,228 ✭✭✭techguy


    SoupBanana wrote: »
    I've recently been told that I have to register and start paying VAT at 13.5%

    I'm paid through PAYE for one job, but I earn money on the side through YouTube which is where the VAT comes into play because it's gone above the threshold.

    My question is do I have to pay VAT on top of the 51% income tax (40% income, USC and PRSI etc). 51% is what I pay on everything I earn outside of my PAYE job.

    So if I earned 100,000 for example.

    Would I pay 13,500 in VAT AND 51,000 in tax?

    Or does the 13,500 paid in VAT come off the final bill at the end? It sounds to good to be true so I'll assume not.

    I can't "charge" VAT on most of the way I earn money as it isn't invoiced. So this is now an extra charge and potentially meaning I have to pay 64.5% on everything I earn.

    Cheers

    Hi OP,

    May I ask who told you that?

    First, I am not an accountant. Second, I'm going to say it because it will be said eventually, but you really need to speak with an accountant. I don't just mean that from a regulator perspective, to ensure you file returns correctly. They will also likely save you money in the long run.

    From a quick look online there are varying things popping up such as "EC Reverse charge" and also that YouTube/Adsense income is 0% rated. At a minimum, I would call the revenue and ask them about this. They should have some guidance to point you towards.

    VAT isn't really something that you pay. It is a tax you charge your customers, then pass that tax onto the revenue commissioners. Problems arise when somebody makes mistakes and becomes liable for VAT but doesn't charge the customer. Then it comes out of your pocket.


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    #3
    Sleeper12
    Registered Users Posts: 16,907 ✭✭✭✭Sleeper12


    I'm not sure if you have a job & have a YouTube business.

    If your job isn't part of the YouTube business then there is no vat involved.

    From your YouTube business point of view you need to register with revenue for vat if your turnover is something like 37k for service and around double that if your business is sales. You charge vat on your service. You can claim back VAT on business expenses (a new pc perhaps). Wages have nothing to do with vat. You pay vat on the turnover of the business and pay expenses & wages after this. So you will have already paid vat on the money used to pay wages


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    #4
    techguy
    Registered Users Posts: 2,228 ✭✭✭techguy


    Sleeper12 wrote: »
    I'm not sure if you have a job & have a YouTube business.

    If your job isn't part of the YouTube business then there is no vat involved.

    From your YouTube business point of view you need to register with revenue for vat if your turnover is something like 37k for service and around double that if your business is sales. You charge vat on your service. You can claim back VAT on business expenses (a new pc perhaps). Wages have nothing to do with vat. You pay vat on the turnover of the business and pay expenses & wages after this. So you will have already paid vat on the money used to pay wages

    Oh yes, good point - I forgot to mention the segregation of PAYE revenue for VAT purposes.


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    #5
    NotAnotherOrange
    Registered Users Posts: 61 ✭✭NotAnotherOrange


    techguy wrote: »
    Hi OP,

    May I ask who told you that?

    First, I am not an accountant. Second, I'm going to say it because it will be said eventually, but you really need to speak with an accountant. I don't just mean that from a regulator perspective, to ensure you file returns correctly. They will also likely save you money in the long run.

    From a quick look online there are varying things popping up such as "EC Reverse charge" and also that YouTube/Adsense income is 0% rated. At a minimum, I would call the revenue and ask them about this. They should have some guidance to point you towards.

    VAT isn't really something that you pay. It is a tax you charge your customers, then pass that tax onto the revenue commissioners. Problems arise when somebody makes mistakes and becomes liable for VAT but doesn't charge the customer. Then it comes out of your pocket.

    An accountant told me that :)

    I'll try and explain more clearly.

    - I have a normal job where I'm paid through PAYE and pay my normal tax through there

    - As a side income I also create YouTube videos where the revenue in one year has exceeded 37,500

    - My accountant has told me because of this I need to register for VAT because it's a service

    - My question is where does VAT come in? Do I have to pay VAT on the money I'm receiving from YouTube? Where the money is automatically sent to me without an invoice? Or do I only charge VAT and pay it on say a sponsorship where I invoice a company directly?

    I guess the accountant should know this, but I'm waiting for them to get back to me and I'm interested in how this works.

    Maybe as suggested above I should just call revenue.


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    #6
    TheChizler
    Registered Users Posts: 9,426 ✭✭✭TheChizler


    I was surprised to find this but they might be on to something, I guess you're selling Google ad space on your videos (I'd get it if it was a website you owned, but it's their own platform??) and you have to charge Google VAT and pass it on to revenue. I might be reading it wrong but it won't cost you anything as they're supposed to pass you on extra money once you send them a VAT invoice, don't hold me to that though... :D

    https://support.google.com/adsense/answer/1322031?hl=en


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    #7
    techguy
    Registered Users Posts: 2,228 ✭✭✭techguy


    SoupBanana wrote: »
    An accountant told me that :)

    I'll try and explain more clearly.

    - I have a normal job where I'm paid through PAYE and pay my normal tax through there

    - As a side income I also create YouTube videos where the revenue in one year has exceeded 37,500

    - My accountant has told me because of this I need to register for VAT because it's a service

    - My question is where does VAT come in? Do I have to pay VAT on the money I'm receiving from YouTube? Where the money is automatically sent to me without an invoice? Or do I only charge VAT and pay it on say a sponsorship where I invoice a company directly?

    I guess the accountant should know this, but I'm waiting for them to get back to me and I'm interested in how this works.

    Maybe as suggested above I should just call revenue.

    Ah ok, sorry that I assumed you hadn't spoken to an accountant.

    You need the accountant to figure this out really but get some advice from Revenue.

    Also, well done on getting to that level of revenue on YouTube.. I am sure it follows a lot of hard work, keep it up :)


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    #8
    NotAnotherOrange
    Registered Users Posts: 61 ✭✭NotAnotherOrange


    TheChizler wrote: »
    I was surprised to find this but they might be on to something, I guess you're selling Google ad space on your videos (I'd get it if it was a website you owned, but it's their own platform??) and you have to charge Google VAT and pass it on to revenue. I might be reading it wrong but it won't cost you anything as they're supposed to pass you on extra money once you send them a VAT invoice, don't hold me to that though... :D

    https://support.google.com/adsense/answer/1322031?hl=en

    Thanks, I'll take a look at that. What a weird setup!


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    #9
    Marcusm
    Registered Users Posts: 10,215 ✭✭✭✭Marcusm


    SoupBanana wrote: »
    Thanks, I'll take a look at that. What a weird setup!

    You need to work out:

    What you are supplying
    To whom you are supplying and
    Where is the place of supply

    With these three facts established, it should be possible for your accountant, if he is halfway competent, to determine whether or not a VAT liability exists.

    You are operating as a business and I assume your customers are not consumers or are they? Who provides you with your revenue? If it’s Google or YouTube then you need to identify the contracting party, US, EU, Ireland and apply the VAT rules on a B2B supply.

    I suspect that, unless you are dealing with the Irish entity, you will not have to charge VAT on the supply. Even if you are supplying the Irish entity, there is no reason for you not to simply add VAT to your current charges as they will have 100% recovery.

    If your accountant doesn’t understand this there’s no point in paying him/her.


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    #10
    NotAnotherOrange
    Registered Users Posts: 61 ✭✭NotAnotherOrange


    Marcusm wrote: »
    You need to work out:

    What you are supplying
    To whom you are supplying and
    Where is the place of supply

    With these three facts established, it should be possible for your accountant, if he is halfway competent, to determine whether or not a VAT liability exists.

    You are operating as a business and I assume your customers are not consumers or are they? Who provides you with your revenue? If it’s Google or YouTube then you need to identify the contracting party, US, EU, Ireland and apply the VAT rules on a B2B supply.

    I suspect that, unless you are dealing with the Irish entity, you will not have to charge VAT on the supply. Even if you are supplying the Irish entity, there is no reason for you not to simply add VAT to your current charges as they will have 100% recovery.

    If your accountant doesn’t understand this there’s no point in paying him/her.

    But I'll still have to pay VAT on what I'm earning from them?


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    #11
    TheChizler
    Registered Users Posts: 9,426 ✭✭✭TheChizler


    SoupBanana wrote: »
    But I'll still have to pay VAT on what I'm earning from them?
    You don't pay VAT on what you earn though, it's not you being taxed. You have a product (ad space on your videos) which you're selling to Google. You charge them an additional 21% on your price A. Google go on to sell that ad space to a consumer at a markup B and charge them that 21% of A (which is essentially passed back to you which you pass on to revenue), in addition to 21% on their margin B which they pay directly to revenue. To the consumer buying the ad this is just a single 21% charge on their invoice (21% of A + B).

    Unless your payment from Google already includes VAT, and I don't think it does cause you have to specifically invoice them for this, this isn't coming out of what you're paid.


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