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gladkacipka

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First, let me introduce myself as this is my first post here.So hello all, Im gladkacipka, not irish but living in Ireland for the last few years. Im doing some seo stuff, and just recently started playing with paid traffic(ppc google, yahoo etc.)

My adwords account is linked to my irish cc and my irish address. After running one of my first campaigns I realized that Google is billing me for VAT(22%) even though my account is a business account(as I use adwords for business purposes). It’s quite confusing this VAT thing and I am looking for anyone who has some more understanding in this matter. I thought that having business account in google adwords will result with not being billed for VAT, but it seems I was wrong. I did some small research and found this:

I. Your business address is in Ireland.
Google Ireland Ltd will automatically add VAT to your AdWords costs at the current Irish rate, regardless of whether or not you use AdWords for business purposes.
If you are exempt from Irish VAT under 13b Exemption status, please fill out (this form- link)to provide us with the necessary information.



So based on the above, eventhough my acc is business, as I am based in Ireland with Irish address I still need to pay VAT?Is that correct?Is it possible not to pay VAT and get some refund for already paid VAT? .The whole VAT thing is very new to me and im totally lost here. Should I register somehere to get a VAT number?Why do I need it if im doing affiliate marketing and most of my customers are based in US?

Anyone familiar with google adwords/VAT?How do you guys have your account setup?Do you pay VAT for your account?
Any help regarding this will be much appreciated!

Thanks and have a sunny day:cool:
 

Redfly

New Member
If you have a business, you pay VAT to Google and you can claim it all back from revenue. It's a pain in the arse I know, but it's the law.
 

link8r

New Member
You are in Ireland, Google is billing you in Ireland. Same as every other business - you get charged VAT. You are only not charged VAT if Google was in another European country and did not bill you from Ireland. You claim the VAT back from Revenue in your VAT3 form same as all the other VAT (toxic debt as I like to think of it...lulz).

If you're not registered for VAT how were you thinking you shouldn't be paying VAT? Basically VAT works like this - you buy x stock from wholesaler ABC Traders Ltd. ABC Traders Ltd are registered for VAT. They sell you the goods at €1000 + 21.5% vat = €1215.00. You then resell the goods to other people for a cumulative €10,000 - with VAT of €2,150.00. Your VAT Return to the Revenue Commissioners would be for €2150 (VAT IN) - VAT OUT (€215 on goods + VAT on other business purchases) = VAT Liability due.

If you a person trading in Ireland you must register yourself as self-employed/sole trader with Revenue. If you are selling a service and will make more than €35k in 1 year - then you also have to register for VAT. If you are selling a mix of goods and services, the threshold is €65k. If you dont register you can't claim VAT back (on business purchases).

You can claim retrospectively but you will need to agree the timeframe with Revenue for this - in which time you should be charging VAT.

You need to keep all your statements from Google and other receipts for things you buy.

Registering for VAT will mean that the things you're selling on your website would now have to have VAT included at 21.5%. So you're possibly facing losing 21.5% off your product as you're proably not going to be able to increase the price, so registering for VAT if you don't need to might not be financially vialbe. So if you were turning €50k of goods sales, I'd say don't register - you're going to only get 21.5% back on purchases (Which tends to be lower than the sales figure).

Mind you - you're probably getting VAT from the purchases of the goods in the first place, so this would be refundable too (as I pointed out in my little equation above)

Vat is done every four months - January, Feb, March, April - filed before the 15th of May.

That should get you started.
 

gladkacipka

New Member
WOW! thanks guys for fast responses, especially link8r.Shouldnt you all enjoy this unusual beautiful weather today? i didn’t expect such a fast replies.

Anyway, the brilliant explanation you gave me seems to be very detailed but not detailed enough for me I guess hehe. Sorry, im not a business person and have never registered for any vat and stuff like that and never been interested in this. I don’t work for any agency or anything like that, in fact I am a full time worker in a company that has nothing to do with seo/ppc, but in my spare time I make sites and recently started buying traffic from google and yahoo.

My model is 100% affiliate , so basically I send traffic to networks or directly to merchants that provide affiliate program. I don’t deal with physical products at all. And this is where I Am lost. Using adwords I directlink to merchants or build landing pages and hope for high ROI .Last month I spent around 1k euros just on clicks in google, made 500euros profit and paid around 250 euros VAT that gives me 250 euro profit. So even though these 3 campaigns were profitable , like 50% of my profit went for VAT.
I have never paid any vat or anything like that before from my seo sites, so I was surprised to see that. As I stated above, im not a business registered in revenue or self employed or anything like that. I work for a company in Dublin, but in my spare time im trying to make some extra income.

From what you said, I understand that in order to claim VAT I paid and will pay, I need to register for VAT.I found this on some site, that’s very similar to your words:

Persons supplying taxable goods or services in the course or furtherance of business must register and account for VAT if their turnover is in excess of certain limits.

Now, am I the one who is supplying taxable goods or services, if I buy traffic from google and I send it networks or merchants? Most of these companies are US based and im just getting wire transfers to my bank account. What I should do in this situation? Does it mean that I’ll need to treat this VAT as my overall costs for campaigns if I don’t register for VAT?
Would you register for VAT in my situation anyway? Sorry if these are dumb questions but as you can see I am just a small guy with no experience in dealing with this stuff.

Thanks a lot for your time!

Ps.@ redfly, im using your global search addon for sometime now, didn’t know that you are Irish based company !nice to hear that. are you looking for any trainees in your agency or smth?;)
 

link8r

New Member
WOW! thanks guys for fast responses, especially link8r.Shouldnt you all enjoy this unusual beautiful weather today? i didn’t expect such a fast replies.
I'm suffering from hayfever, so trying to stay out of the sun. I have teams working away overseas, so I'm just logging in and out and just checking up on things.

My model is 100% affiliate , so basically I send traffic to networks or directly to merchants that provide affiliate program. I don’t deal with physical products at all. And this is where I Am lost. Using adwords I directlink to merchants or build landing pages and hope for high ROI .Last month I spent around 1k euros just on clicks in google, made 500euros profit and paid around 250 euros VAT that gives me 250 euro profit. So even though these 3 campaigns were profitable , like 50% of my profit went for VAT.
I have never paid any vat or anything like that before from my seo sites, so I was surprised to see that. As I stated above, im not a business registered in revenue or self employed or anything like that. I work for a company in Dublin, but in my spare time im trying to make some extra income.

From what you said, I understand that in order to claim VAT I paid and will pay, I need to register for VAT.I found this on some site, that’s very similar to your words:

Persons supplying taxable goods or services in the course or furtherance of business must register and account for VAT if their turnover is in excess of certain limits.

Now, am I the one who is supplying taxable goods or services, if I buy traffic from google and I send it networks or merchants? Most of these companies are US based and im just getting wire transfers to my bank account. What I should do in this situation? Does it mean that I’ll need to treat this VAT as my overall costs for campaigns if I don’t register for VAT?
Would you register for VAT in my situation anyway? Sorry if these are dumb questions but as you can see I am just a small guy with no experience in dealing with this stuff.
Essentially you are billing the US companies for a marketing service - You don't need to charge them VAT (as far as I know but you can check this with Revenue). VAT is on the whole invoiceable amount, not on profit. You would have to pay income tax on your profit.

If you are making that kind of money, then you are a sole trader, whether you want to be or not - and therefore legally obliged to register it and pay tax on the income - the profitable part.

As you are not charging the US companies with VAT, but you are being charged VAT here, then registering for VAT would probably mean getting a refund each month from Revenue. To calculate built-in VAT, multiply the number by 121.5. So €121.50 x 121.5 = €100 - the amount without VAT. But then Revenue would be asking why ur registering for VAT if you're not setup as a sole trader.....

Also, if you want to trade under your own name, e.g. Robert Chalmers, then that's fine but if you want to trade as Zyber Global Corp. then you need to register a Business Name with the CRO, costs about €20 and takes 3 weeks.

Once becoming self-employed, you need to file an addtional tax document called a FORM11 by October 30th of the year following the year you are completing the form for. So in 2010 you'll need to do a form for 2009, declaring your various incomes from Properties, Shares, International Funds, Pensions, everything that clearly all self-employed people clearly and automatically derive income from.....

Not filing this is a serious and expensive business.
 

mmedia

New Member
I have a couple of questions on the same subject:

1. If I am registered for VAT and I am not charging VAT, can I claim VAT back?
2. I am settling my google adwords bill in US Dollar on an american express card which is also settled in US Dollar. I am being charged VAT by adwords. Does this pose a problem when it comes to claiming adwords VAT back?

Looking forward to hearing your thoughts!

Cheers.
 

link8r

New Member
Are you living in Ireland?

How can you be registered for VAT and not charge VAT?

Are you being charged VAT by the US? Are you registered in the US for VAT?

You can only claim VAT back from the Revenue body that it was payable to for operations that are registered for in that country.

You'll have to give a lot more information than that.
 

mmedia

New Member
Appreciate the reply! Thanks!

OK, here it goes.

Currently I have a limited company here in Ireland. I also live in Ireland. I do business in the form of affiliate marketing with the US. I get paid in USD, which is sent by bank wire to my USD currency account here in Ireland.

I am not currently registered for VAT. Since I am not registered for VAT, I don't charge VAT or claim VAT back. If I was registered for VAT I still wouldn't be charging anyone VAT.

Currently my google adwords spend is hitting close to $10K a month. I pay my adwords bill in USD with my USD american express and I clear my american express with USD from my USD currency account here.

Basically I am being charged around $2K VAT on top of my $10K spend.

1. Is it possible to claim this VAT back? Since even if I was registered for VAT, I wouldn't be charging anyone VAT.
2. Is it possible to claim VAT back on a google invoice when the currency is in USD?

Let me know if that makes things any clearer
 

link8r

New Member
Currently I have a limited company here in Ireland. I also live in Ireland. I do business in the form of affiliate marketing with the US. I get paid in USD, which is sent by bank wire to my USD currency account here in Ireland.

I am not currently registered for VAT. Since I am not registered for VAT, I don't charge VAT or claim VAT back. If I was registered for VAT I still wouldn't be charging anyone VAT.

Currently my google adwords spend is hitting close to $10K a month. I pay my adwords bill in USD with my USD american express and I clear my american express with USD from my USD currency account here.

Basically I am being charged around $2K VAT on top of my $10K spend.

1. Is it possible to claim this VAT back? Since even if I was registered for VAT, I wouldn't be charging anyone VAT.
2. Is it possible to claim VAT back on a google invoice when the currency is in USD?

Let me know if that makes things any clearer
1. Who is paying you and how much?
2. Where are they based?

If you are invoicing out in excess of €65k a year, I can't see why you wouldn't be registered for VAT? Even if they are outside of Ireland, you
wont have to charge VAT but if they are registered here, you may need to.

You should consult an accountant and/or Revenue at this point - I'm really not a taxation expert!

Best of luck - sounds like a great business you have there.
 

Redfly

New Member
1. Is it possible to claim this VAT back? Since even if I was registered for VAT, I wouldn't be charging anyone VAT.

Absolutely! If you are a registered business (which you are) all VAT you pay to Google can be claimed back. You can claim the VAT back on ANY business expense.

2. Is it possible to claim VAT back on a google invoice when the currency is in USD?

Yes.

I suggest splashing out €100 - €200 on a chartered accountant who can get you set up on ROS (revenue's online filing thingy).

You're probably due back a LOT of VAT.

Another handy thing is that you can offset the VAT you pay against PAYE, PRSI, levies etc. (Makes cashflow that little bit easier).
 

mmedia

New Member
Wow! Thanks for such quick reply's.

1. Who is paying you and how much?
A number of different affiliate networks and 4 figure range per network.

2. Where are they based?
They are all based in the USA or CA.

"If you are invoicing out in excess of €65k a year, I can't see why you wouldn't be registered for VAT? Even if they are outside of Ireland, you
wont have to charge VAT but if they are registered here, you may need to."

I don't invoice them, they just pay me. I get paid based on the performance of the traffic I send to the merchants they have on their network. i.e. the more sales I generate for them, the more money I get.

OK, so let me just clarify this... If I never invoice anyone, can I still claim the VAT back for adwords spend?

I will be eventually getting an accountant etc... but at the moment I my no.1 priority is to make more money and grow the business.

Really appreciating the reply's!

Thanks again.
 

link8r

New Member
1. Who is paying you and how much?
A number of different affiliate networks and 4 figure range per network.

2. Where are they based?
They are all based in the USA or CA.

I don't invoice them, they just pay me. I get paid based on the performance of the traffic I send to the merchants they have on their network. i.e. the more sales I generate for them, the more money I get.

OK, so let me just clarify this... If I never invoice anyone, can I still claim the VAT back for adwords spend?

I will be eventually getting an accountant etc... but at the moment I my no.1 priority is to make more money and grow the business.

Really appreciating the reply's!
.
That just semantics - you dont have to be physically invoicing them - if they're paying your Limited Company, same difference. Its a sale. Yes, you do have to register for VAT - whether its on sales or invoices - its still turnover, money in, whether or not you raise the invoice. You may be able to quality for section 13b or some VAT exemption (which still allows you to claim back VAT) but you do need to clarify if you need to charge the US or Canadian companies VAT - that's up to the Irish government.

If you do have a limited company, you need an accountant and you need to keep accurate books AND management accounts (up to profit and loss statement) - and you and the other director (there must be two) are both liable for ensuring you have this -from the get go.
 

gladkacipka

New Member
Hi guys,

Thanks all for your replies link8r, redfly and mmedia > (seems like we have very similar business model and very similar problem.The only difference I can see are the numbers :)

Anyway, I get some basic idea now but it looks like there is more to learn about this than I thought at the beggining.Well, live and learn :)

Thanks all
 

pepsi7

New Member
VAT claims & Tax returns

Hi - was just reading the above posts and yes I also work for a European firm based outside Ireland and dont charge VAT but do claim the VAT on purchases back in Ireland.

Also - I wanted to ask - without having an accountant on board yet, does anyone know where I can find a list of what can and cannot be offset against yearly Income Tax returns? I am filing my first Tax return this yr and only have info from living in UK previously.

Any advice appreciated!
 
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