Basic Accountancy/Tax Question

G

garyaka

Guest
Sorry I'm sure this has been asked many a time before, but I have a basic accountancy/tax question which I hope you could help me with, It is a .Ltd Company and we current charge 21% VAT on our services when invoicing.

When we do our tax return what percentage is returned? I heard is something like 27% so is that 21% of the charged VAT and a further 6% from our income?
 
VAT is generally not a cost to a company which is registered for VAT. The company should prepare its accounts on a VAT exclusive basis (so the income is the amount charged before VAT and the costs are the amounts before VAT too).

If the company is profitable, its profits are then taxed at 12.5% (with a 25% for certain types of income such as rent, dividends, mining).
 
Thanks for the response Nige, I was aware that profits at year end are charged corporation tax of 12.5%.

So just as an example if the invoice is

€10,000 with VAT at 21% Totaling €12,100
once the company receives payment it is only liable to pay €2,100 back to the revenue?

And then the 12.5% at year end on profit?
 
I don't mean to overcomplicate things, but...

- We shouldn't assume that the standard rate of VAT is the correct rate in this instance

- We shouldn't assume that 12.5% is the end of the story from a tax perspective (which Nige didn't to be fair)
 
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