Self-employed - VAT question

Hi,

I've searched the forum for a similar post but came up with nothing...

I have a limited company and basically contract out my time to companies. Most of the time I work from home. Up to now I have only worked for Companies outside of Ireland and VAT was zero-rated. However, I am about to start a contract in Dublin. An hourly fee was negotiated. I'm looking at the contract they sent me and it says "the fee will be inclusive of VAT (if applicable)...". My questions are:

Is VAT applicable and if so at what rate?
If I do charge VAT, I presume the company can get a refund of any VAT paid? (If this is the case, then they are getting a "discounted" service rate.)
Is this normal?

I do have an accountant but she is not available for a few days. Any clarification on this would be much appreciated.

Thanks,

Dave

Your services could be chargeable at 21.5% or 13.5% depending on what it is you do. Some services such as, accountancy, legal etc would be 21.5%. Some services such as electrician, plasterer would be 13.5% .

Where VAT registered parties are involved it is normal to quote plus VAT as the VAT is recoverable. If the price you have is quoted incl VAT then the net cost to the customer is less either 21.5% or 13.5% whichever applies to you.

Thanks for the response. I've managed to contact my accountant but am still waiting for a response.

I think you are right, and looking at http://www.revenue.ie/en/tax/vat/rates/index.jsp the VAT rate applicable will be 21.5%. This would equate to a nice discount for the company and a sizeable gap in my pocket...unless we can come to alternative arrangements

Thanks again.

Why dont you just increase your fee by 21.5%?

You may not need to register for vat based on irish turnover threasholds.
In that case there is no vat chargeable and you can retain the original price maybe?
Caveat - not an accountant!

Your client is trying to pull a fast one on you. This is one of the oldest tricks in the book. If they were aware of any confusion on your part, in your original quotation, regarding VAT, say if you failed to mention that the quote was ex-VAT, they are taking advantage of this.
It is usually a "given" in business that all cost prices, fees etc. are quoted ex-vat. As it is Revenue money at the end of the day and is not part of the sellers profit or the buyers cost.

If it is not too late insist that your quotation was ex-VAT or re-quote to include the 21.5% VAT otherwise you will be down the VAT content, your client will be up and Revenue get theirs anyway.

@jack2009 - as far as I am concerned, the rate has been agreed, and agreed ex-VAT.

@runner - I am already registered for VAT so that's a non-runner

@rael - regarding pulling a fast one, I'll give them the benefit of the doubt. I agree though, it is a given that with such business, costs are quoted ex-VAT. As the VAT is refunded it does not contribute to the cost, so it wouldn't be factored into, say, the budget covering my fees. I did speak to my accountant and VAT is applicable at 21.5% and she too agreed that quoting ex-VAT makes more sense.