Some VAT advice needed

G

genmicstip

Guest
I am a sole trader, not yet registered for vat because my earnings haven't reached that level.

I have been made an offer by an American company who will pay me a decent amount of money each month.

This would mean I need to register for vat. Does this also mean that I have to charge them 21% on top of the salary they're willing to pay me? This would obviously be a considerable amount of money and I'm a little bit anxious that if I go to them and tell them there's a 21% increase on what they need to pay me they won't like it very much.

Can this American company reclaim the VAT I charge? I hope that makes sense.

Any advice gratefully received.
 
If the american company has offices here, then its probably registered for vat,and they can recover or offset you vat.
Otherwise, they dont have an office here, and you will invoice their headoffice in usa say, and you dont have to charge vat once they are tax registered in usa.
 
Yes you would need to charge them vat and in such a structure the American company couldn't reclaim the vat UNLESS they elected to register for vat in Ireland (or another EU country) in which case they could do so.

Maybe you should consider becoming an Irish employee of the American company instead. This would mean that the American company would need to register as an employer in Ireland and submit returns for paye and prsi relating to your employment. In this event the company would need to pay employers prsi which is an extra cost but a lot less than 21%
 
Importer said:
Yes you would need to charge them vat and in such a structure the American company couldn't reclaim the vat UNLESS they elected to register for vat in Ireland (or another EU country) in which case they could do so.
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runner said:
Otherwise, they dont have an office here, and you will invoice their headoffice in usa say, and you dont have to charge vat once they are tax registered in usa.
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heh, which one is true?!

Maybe you should consider becoming an Irish employee of the American company instead. This would mean that the American company would need to register as an employer in Ireland and submit returns for paye and prsi relating to your employment. In this event the company would need to pay employers prsi which is an extra cost but a lot less than 21%
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That's what I was hoping they'd be able to do. Is that a relatively straightforward process?
 
If your services are "Fourth Schedule" services i.e. consultancy, advertising, I.T, legal etc, you will not be obliged to charge Irish VAT provided the recipient is established outside the EU.

Check out www.revenue.ie for an information leaflet and a full list of such services to which this VAT treatment can apply.

If your services are not Fourth Schedule, you will be obliged to charge Irish VAT at the appropriate rate. The US company will be in a position to reclaim this VAT under the 13th VAT Directive.

If the services (Fourth Schedule or otherwise) are being provided on a continuous basis, the US Co can apply to the Irish Revenue for a VAT60B. This allows you to zero-rate the supply and provides a cash flow advantage for US Co as it avoids the hassle of subsequently reclaiming the VAT under the 13th VAT Directive.
 
BPC said:
If your services are "Fourth Schedule" services i.e. consultancy, advertising, I.T, legal etc, you will not be obliged to charge Irish VAT provided the recipient is established outside the EU.

Check out www.revenue.ie for an information leaflet and a full list of such services to which this VAT treatment can apply.

If your services are not Fourth Schedule, you will be obliged to charge Irish VAT at the appropriate rate. The US company will be in a position to reclaim this VAT under the 13th VAT Directive.

If the services (Fourth Schedule or otherwise) are being provided on a continuous basis, the US Co can apply to the Irish Revenue for a VAT60B. This allows you to zero-rate the supply and provides a cash flow advantage for US Co as it avoids the hassle of subsequently reclaiming the VAT under the 13th VAT Directive.
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Ok, I think I fall under that 'Fourth Schedule' remit. Do I then have an obligation to charge VAT?

It's just that your last paragraph confused me somewhat. The service will be provided on a continuous basis but if it's Fourth Schedule why would they need to apply for the VAT60B?

Thanks to all for the help so far.
 
Provided your services are services listed on the Fourth Schedule (of the Irish VAT Act 1972) you will not be obliged to charge Irish VAT. Your invoice must be in the name of US Co, being a non-EU entity.

Apologies for the last comment, it was somewhat confusing. You are correct, a VAT60B would not be necessary if your services are Fourth Schedule as you would not be charging any Irish VAT. Only if your services were not Fourth Schedule services would the VAT60B be advantageous for US Co as in this case VAT would apply.

It would be prudent to ensure your services are in fact Fourth Schedule services. I would suggest reading VAT Info leaflet No. 1/05 (available on Revenue website) which is likley to clarify matters for you.
 
Great, thanks for the clarification and the info. Much appreciated.
 
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