VAT 37.5k v 75k?

Monbretia

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Oh wise ones of the accounting world can you help give an explanation or an answer to a vat query? It relates to the table of thresholds on the revenue site and to particular businesses.

The principal thresholds are as follows: (from Revenue site)

  • €37,500 in the case of persons supplying services only.
  • €37,500 for persons supplying goods liable at the [broken link removed] or [broken link removed]which they have manufactured or produced from [broken link removed] materials.
  • €35,000 for persons making mail-order or distance sales into the State.
  • €41,000 for persons making acquisitions from other European Union Member States .
  • €75,000 for persons supplying goods.
  • €75,000 for persons supplying both goods and services where 90% or more of the turnover is derived from supplies of goods.
  • A non-established person supplying taxable goods or services in the State is obliged to register and account for VAT irrespective of the level of turnove
Ok, the query relates to the second point there and the lower threshold for goods manufactured or produced from zero rated materials. Must everything used in the making of these products be zero rated? For example a food product that is basically made from zero rated ingredients but then things like the box to put it in or other packaging has vat on it? Other features of the business would have vat too, just not the basic food ingredients let's say. Or is there a percentage of costs that must be zero rated? I imagine it would hard to find any business operating totally without any vat charge on something they purchase so who does this lower threshold apply to?

So for example a producer of a baked type food product, are they 37.5 or 75k limit bearing in mind flour/sugar/butter/eggs are vat free?
 
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