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Supply of Goods
This Chapter describes the various ways in which supplies of goods for VAT purposes are made, and outlines the VAT treatment appropriate to each type of supply.
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Where goods are installed or assembled, the place of supply is the place where the goods are installed or assembled. Example 2 A VAT-registered Irish company engages an EU-based company to supply and install a machine in its premises in the State. The place of supply is the State. There is no obligation on the non-established supplier to register for VAT in Ireland as the recipient is one of those classes of persons who must account for the output VAT arising on the supply. If the goods have been bought for the purposes of its taxable business, a simultaneous input credit may be taken by the buyer thus making the transaction VAT neutral.
Where goods are supplied on board vessels, aircraft and trains during intra-EU transport, the place of supply is the place where the transport begins. Example 3 A private individual living in the EU buys some goods while travelling on the Dublin/ Belfast train which leaves from Dublin. As the place of supply for VAT purposes is the place where the transport begins, Irish VAT arises on the supply in this instance.
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Distance Sales Distance sales refer to goods other than new means of transport which are (a) either transported or dispatched to unregistered persons in the State from another EU Member State or from outside the EU through another EU Member State or (b) transported or dispatched to unregistered persons in another EU Member State from this State. Distance sales into Ireland The concept of distance sales made to this State by non-established suppliers is covered in paragraph 2.14.The place of supply of such goods is Ireland as the transportation or dispatch ends here where the supplier has exceeded the Irish registration threshold or has opted to register here. Where the supplier has not exceeded the Irish registration threshold or has not opted to register for VAT in Ireland the place of supply is where the transportation or dispatch begins.
Example 4 A VAT-registered UK trader supplies goods by means of mail-order to a private individual in the State. As this trader sells goods by mail-order of more than c35,000 in a calendar year to private individuals in the State, the place of supply is where the transportation ends, in this case the State. This trader is obliged to register for VAT in the State and to account for Irish VAT on the goods.
Distance sales out of Ireland In the case of distance sales made from Ireland the place of supply of such goods is the Member State where the transport or dispatch ends where the supplier has either exceeded the registration threshold in the other Member State or has opted to register in that Member State. Where a supplier has not opted to register for VAT in that Member State the place of supply is Ireland i.e. where the transportation or dispatch begins.
Example 5 A VAT-registered Irish trader supplies goods by means of mail-order to a private individual in the UK. If the sellers level of trade to private individuals in the UK is below the Distance Sales threshold of 100,000 as applied in the UK and the trader has not elected to register for VAT in the UK, the place of supply is the State and, therefore, the trader has an obligation to account for Irish VAT on the goods.
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Details of the thresholds applying to Distance Sales in the Member Sales of the EU is at Appendix J. Where natural gas or electricity is supplied to a taxable dealer the place of supply is the place where the taxable dealer has his or her business. In the case of supplies of natural gas and electricity to a customer other than a taxable dealer, the place of supply is where the customer uses and consumes it. Effectively this is the place where the metre is located. If the natural gas or electricity is not fully consumed by the customer he/she is deemed for VAT purposes to have consumed it. A special leaflet dealing with the supply of electricity across borders under the Single Electricity Market is available. For full details please see VAT Information Leaflet Electricity Market.
3.3 Self-supplies
A self-supply of goods occurs when an accountable person diverts to private or exempt use, goods in respect of which he or she is entitled to a VAT deduction. Examples of self-supplies: Example 6 A jeweller takes a watch from stock-in-trade for his/her own personal use in May 2008: Cost of watch VAT-inclusive VAT element (21%) c1,210 c210
This is a diversion to private use of goods for which the jeweller was entitled to a VAT deduction.Therefore, the jeweller is obliged to account for the self-supply by increasing his/her VAT on salesfigure (T1 box on VAT 3 form) by an amount of c210 in the May/June 2008 VAT return.
Example 7 A builder uses building materials to refurbish/repair his/her private house to the value of c3,630 in June 2008: Cost of materials VAT-inclusive VAT element (21%) c3,630 c630
This is a diversion to private use of goods for which the builder was entitled to a VAT deduction. Therefore, the builder is obliged to account for VAT on the self-supply by increasing his/her VAT on sales figure (T1 box on VAT 3 form) by an amount of c630 in the May/June 2008 VAT return.
In both of these examples, the supplier becomes the final customer and he or she must, therefore, suffer the VAT on those supplies, in the same way as every other final customer does. Traders do this by accounting for VAT on the cost to themselves of the goods, exclusive of VAT.
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An example of a self-supply to an exempt business use is as follows: Example 8 A car dealer diverts a car from stock-in-trade for use in his/her taxi business in April 2008: Cost of vehicle VAT-inclusive VAT credit claimed on purchase as stock c28,000 c4,858
This is a diversion to exempt use of goods for which the car dealer was entitled to a VAT deduction. Therefore, the car dealer is obliged to account for VAT on the self-supply by increasing his/her VAT on sales figure (T1 box on VAT 3 form) by an amount of c4,858 in the March/April 2008 VAT return.
For details of self-supplies in relation to property please refer to the VAT on Property Guide.
3.4 Gifts
With some exceptions, gifts of taxable goods made in the course or furtherance of business are liable to VAT unless their cost to the donor, excluding VAT, is c20 or less. Where gifts are taxable, the chargeable amount is their cost to the donor, excluding VAT. In the case of gifts costing more than c20 excluding VAT, no allowance is made for the amount below which gifts are not taxable. Accordingly, the person who makes a gift of goods costing c20 excluding VAT, has no liability, while the same person making a gift of goods costing more than c20 excluding VAT, must account for VAT on the full amount.The rate of VAT depends on the goods involved.
3.7 Supply of goods and services in exchange for vouchers, tokens etc.
The sale of gift vouchers etc. (other than vouchers sold to and by intermediaries) is not liable to tax except where, and to the extent that, the amount charged exceeds the value shown on the voucher.
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