This refers to when one business makes a transaction within another business. Typical examples include selling infrastructure and wholesaling.
This refers to a transaction between a business and individual consumer. Typical examples include retail and tourism.
This refers to transactions based on customers trading directly with each other, commonly online-based: auctions and classified advertisements. Typical platforms: eBay, Amazon and Etsy.
This refers to transactions in which consumers generate value and then sell directly to businesses who want to purchase this value. Typical example could be an artist’s selling their own individual work to businesses.
This refers to the electronic transactions of buying/selling tangible goods and services through the internet. This process requires more than one party and the exchange of currency to complete a transaction.
What is vat?
VAT known as ‘value-added tax’ is a percentage-based tax on products/services with the premise being, ‘consumers pay a tax on the products they buy based on the value of the product’. As a result, this tax is paid by the customer.
why do we pay VAt?
VAT is accumulated by businesses for the government. Thus, VAT provides a consistent and extremely valued source of revenue-raising for governments around the world.
What are the VAT rates?
In Northern Ireland, there are 3 different tax rates:
- Standard rate 20% (most goods/services)
- Reduced rate 5% (certain goods/services: home energy)
- Zero rate 0% (food/children’s clothes).
For more particular enquiries have a look here.
In Ireland, there are 5 different tax rates:
- Standard rate 23% (most goods/services)
- Reduced rate 13.5% (certain goods/services, find list here)
- Second reduced rate 9% (specific goods/services can be found here)
- Livestock rate 4.8% (general livestock)
- Zero rate 0% (list of applicable good/services can be found here)
What is the difference between Tax and VAT?
A tax in general terms is a monetary charge placed on individuals, consumers and businesses by governments globally.
This can be split into 2 types, direct and indirect.
A direct tax is paid by a person/business directly to the government. This is based on income, wealth or profits.
Typical examples: income tax, inheritance tax, corporation tax and national insurance.
An indirect tax however, is applied to a good or service at the point of sale, therefore increasing the price. Therefore, this tax is then collected by businesses and transferred to governments.
Typical example of this being: VAT (value-added tax).
What is the difference between zero-rated VAT and VAT exempt?
Zero-rated refers to goods/services that are still VAT-taxable however, the current rate of VAT you must charge your customers stands at 0%.
It is crucial to note that, these goods/services are still recorded in your VAT accounts and you must report them on your VAT Return.
VAT exempt refers to certain goods/services that are not subject to VAT charges.
What goods/services are VAT Exempt?
In NI, goods and services which are currently VAT exempt are as follows:
• Insurance, finance and credit
• Education and training
• Fundraising events by charities
• Subscriptions to membership organisations
• Selling, leasing and letting of commercial land and buildings – this exemption can be waived.
In ROI, goods and services which are currently VAT exempt are as follows:
• Financial services
• Medical services
• Educational services.
• Live theatrical and musical performances (except those where food or drink is served during all or part of the performance).