Royalty income question

Could someone point me in the right direction about the following please? The scenario is as follows:

Irish VAT-registered company was contracted to write educational textbooks for a UK publisher. UK publisher paid an advance on royalties to the Irish company during the most recent financial year and send a statement detailing the number of texts sold. More royalties to follow in due course (presumably).

On what basis is royalty income typically taxed? (No artists exemptions apply)

In general, are there VAT implications applicable to royalty income?

If anyone has useful links that could shed some light on this matter for me, I'd be very thankful.

Royalty income is taxed on a receipts basis at 25%. VAT is treated as per normal - get VAT number and zero rate it.

Paddy199 said:

Royalty income is taxed on a receipts basis at 25%. VAT is treated as per normal - get VAT number and zero rate it.

Click to expand...

Thanks Paddy199, that's very helpul. Just so I understand you correctly, am I right in concluding:

from a tax perspective, there'd no distinction between an advance payment of royalties and royalities that arise after publication of a text

for VAT purposes, the transaction is an intra-community supply.

Correct. It may be more tax efficient to stagger the royalty payments. You should only consider this route if the figures are substantial and the risk of non payment is minimal.

Correct on the VAT.

Correct me if I'm wrong but is patent royalty income not exempt from income tax subject to high earners restrictions?

censuspro said:

Correct me if I'm wrong but is patent royalty income not exempt from income tax subject to high earners restrictions?

Click to expand...

The OP is talking about royalties to the author of a book, as opposed to patent royalties...

The exemption you mention was done away with in the last Budget (from the Budget Summary on Revenue.ie):

Patent Royalty Income Exemption
As announced in the National Recovery Plan 2011-2014, the tax exemption for income received by an individual or company from a qualifying patent is abolished as is the tax exemption for distributions made by companies from exempt patent income. In line with established practice, abolition takes effect from the launch of the Plan on 24 November 2010.
With the abolition of the exemption from tax for patent royalties, withholding tax will now have to be deducted from all patent royalty payments as required under section 238 TCA except those covered by the EU Interest and Royalties Directive, certain payments of royalties to companies resident in tax treaty countries as provided for in section 242A TCA and those patent royalties covered by the administrative practice referred to in Revenue’s Statement of Practice SP-CT/01/10.