Cross Border VAT/Corporation Tax query

[trigger3]

My friend has a business which has its premises and base just over the border in Northern Ireland but which carries out 70% of its business in Ireland. They sell and deliver their products across Ireland but currently charge UK VAT only and therefore all the sales in Ireland are 0% rated under the UK Vat system. The business is only registered for VAT, PAYE and Corporation Tax in the UK but would he be liable to register for Irish VAT/Corporation Tax since approximately 70% of his business is to Ireland??

 

[trigger3]

My friend has a business which has its premises and base just over the border in Northern Ireland but which carries out 70% of its business in Ireland. They sell and deliver their products across Ireland but currently charge UK VAT only and therefore all the sales in Ireland are 0% rated under the UK Vat system. The business is only registered for VAT, PAYE and Corporation Tax in the UK but would he be liable to register for Irish VAT/Corporation Tax since approximately 70% of his business is to Ireland??

Just thought I would bump this. Has anyone any thoughts/information on this?

 

[Joe_90]

I'm sure lots of people have thoughts/information, some of us may even know the answer but International Tax is a complex area, I imagine your "friend" has an accountant whom he pays for their advice, I think that they should ask their accountant to clarify the situation.

So many assumptions, that its a Northern Irish company, that its centre of management and control is in Northern Ireland http://www.revenue.ie/en/tax/ct/basis-charge.html

 

[ninak]

We operate in the reverse to your friends situation, Irish Company, over 50% of our business in the UK. I looked into this a bit and my understanding is that in our case we are an Irish Company, based in Ireland so pay taxes, Vat, etc here. We charge Vat of 0% to the UK customers, noting on invoices that it is subject to reverse charge. We have to make VIES declarations noting all trade and Vat numbers of UK clients. All sales are included on VAT3 forms under sales to other EU countries.

There is often a distance selling limit that once you go over you need to register for Vat in that country. Below is the case in the UK .But note that if their Irish customers are registered for Vat, then it is not deemed distance selling and according to HMRC :"Distance selling only occurs when a customer isn't VAT-registered."

On the HMRC site there is an explanation about what is and is not distance selling, link here, [broken link removed],

According to this selling from one EU country to another EU country is not distance selling as long as your customers are Vat registered. Maybe someone can clarify if this is the same throughout the EU or if Ireland has a different set of rules as to when another EU country selling to Ireland needs to register for Vat in Ireland. Hope this helps.

 

[trigger3]

We operate in the reverse to your friends situation, Irish Company, over 50% of our business in the UK. I looked into this a bit and my understanding is that in our case we are an Irish Company, based in Ireland so pay taxes, Vat, etc here. We charge Vat of 0% to the UK customers, noting on invoices that it is subject to reverse charge. We have to make VIES declarations noting all trade and Vat numbers of UK clients. All sales are included on VAT3 forms under sales to other EU countries.

There is often a distance selling limit that once you go over you need to register for Vat in that country. Below is the case in the UK .But note that if their Irish customers are registered for Vat, then it is not deemed distance selling and according to HMRC :"Distance selling only occurs when a customer isn't VAT-registered."

On the HMRC site there is an explanation about what is and is not distance selling, link here, [broken link removed],

According to this selling from one EU country to another EU country is not distance selling as long as your customers are Vat registered. Maybe someone can clarify if this is the same throughout the EU or if Ireland has a different set of rules as to when another EU country selling to Ireland needs to register for Vat in Ireland. Hope this helps.

Thanks, in this instance practically all its Irish customers are Vat registered and therefore by this logic it would not be deemed distance selling. They presently disclose all of their Irish sales on monthly VIES returns to HMRC with details of sales value and individual Irish customer Vat numbers being disclosed. This sounds very similar to your situation only in exact reverse.

 

[trigger3]

2. Thresholds for Registration for VAT

In the case of supplies in the State and intra-Community acquisitions, registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve-month period. However, it should be noted that in relation to Distance Sales, the threshold is based on a calendar year. The principal thresholds applicable are as follows-
VAT Registration Thresholds in € Date Effective From Goods1 Services2 ICAs3 Distance Sales4 Foreign Traders5 Received Services6 1 May 2008 75,000 37,500 41,000 35,000 0 0

1. While the general turnover threshold for the supply of goods is €75,000, persons supplying goods liable at the reduced or standard rates which they have manufactured or produced from zero-rated materials must register if their turnover is €37,500 or more.
2. While the general turnover threshold for the supply of services is €37,500, for persons supplying both goods and services where 90% or more of the turnover is derived from supplies of goods (other than of the kind referred to in the above paragraph) then the threshold for Goods applies.
3. Intra-Community acquisitions of goods for business purposes by a person in the State
4. Distance sales of goods by a foreign trader to non-registered customers in the State
5. Persons not established in the State but supplying goods and services here must register regardless of the level of turnover.
6. Persons receiving services from abroad for business purposes in the State must register regardless of the level of turnover.

However looking at the above revenue guidelines for Vat registration (taken from revenue.ie) it would appear that any non-registered business must automatically register for Vat in the state?