Do I pay VAT on referral fees?

[sa1122]

Hello!

Lets say a vendor charges €100 for a service including the standard rate of VAT and I earn €10 for the referral, do I pay VAT on the €10 as well? Would this mean that the total VAT payed between us would be higher than if there was no referral involved even though the customer is billed the same amount?

Separately if the vendor provides a service exempt from VAT or a reduced rate would I be exempt / pay the reduced rate?

Thanks for the help.

 

[T McGibney]

Are you VAT registered, or carrying on a VATable trade with turnover above the applicable threshold(s)?

 

[peemac]

If you are registered for vat, yes it applies.

I try to explain this to retailers who accept one4all cards - the real commission is 12.3% as it is 10% of the vat inclusive sale price. Revenue won't give a discount, so on a €100 sale the net is €81.30 and €10 of that is 12.3%

Same process would work for a referral once the goods are standard rated.

In your case, if you are vat registered, you would apply vat to the referral fee - the vendor would pay you €12.30 and reclaim the vat. You would pay the vat over in your vat returns.

If you are not vat registered, none of this applies.