I am Not VAT registered and Based in the UK, so as far as I see it, I should be charged VAT on my Adwords.
However, I've just printed off my latest invoice and it has charged me 0% VAT on my invoice, and says this is in accordance with
'Article 21.1(b), Sixth Council Directive the receipient of the services is obliged to account for VAT on this service'.
OK, so I have a look around the Adwaords FAQ's, and it seems that since I use Adwords for business I can self assess my VAT at my local rate (UK therefore 17.5%). Howvere, I am not VAT registered, as I ma yet to hit the VAT threshold (although I am estimating hitting the threshold in May or June of next year).
So, I must owe the VAT man some money, but how do I go about paying this, and why have google changed this? No doubt its less work for them.
Many Thanks
You're right, but we are dealing with Google Ireland, and therefore have to pay VAT.
I used to get charged loads of VAT (21% which is the rate in Republic of Ireland), but I didn't on the last invoice.
I remember having to do something a few months a go and state whether I use adwords for business, which I stated yes to, as I do.
Maybe Google are assuming that anyone using adwords for business will be VAT registered (which is definately not always the case), and will therefore pay the VAT to when they next pay the VAT man, which for me, won't be for 7 months at least, and at the moment I do not want to voluntarily register for VAT.
Google used to charge VAT (and possibly still do if you haven't selected that you use Google for business purposes), but have since changed their mind. It's now up to the business owner to declare the VAT. The only reason you would want to register for VAT if you're below the threshold is if you want to claim it back.
Some of us are still waiting for our rebates from Google for being charged VAT for the past year or so.
So you are saying that I don't have to actually pay VAT on my Google adwords invoice, and that I don't even have to tell The VAT man about it?
Ronmcd,
I told them about a month or a couple of months ago that I was using Adwords fro business. Does this mean I can expect a refund sometime?
Presumably the Irish government aren't going to be too ahppy about this, since Google will need to claim the money back from them in order to refund, so that businesses can pay locally? Or am I off the mark on that one.
If I don't have to pay until I am VAT registered, then I will be a very happy chappy, but the last thing I want is to be given a huge fine and asked for repayments to be made.
Thanks for pointing that out - very interesting.
Judging by their website, it seems to say that I can't claim back VAT from things I purchase, such as stock, so I would basically just pay 10% (or whatever) of my turnover, which would probably be beneficial.
I only sell goods at the standard rate anyway, so It makes no odds to me whether I have to work out 10% or 17.5%, but off the top of my head I guess it would be beneficial to me to pay 10% of my Turnover, and not claim anything back, rather than 17.5% and claim back VAT I have paid already on goods purchased. Do you do this, and is it beneficial to you.
Also, (I appreciate you aren't an accountant (or maybe you are)), If I refund a customer, can this be taken from My turnover, or do I still owe VAT on the original transcation?
I obviously intend to get information from my tax office nearer the time, but it would be handy to know a few of these things now.
Thanks again.
You add 17.5% VAT on all sales.
The flat rate is charged on all your output (sales).
You cannot claim back VAT on purchases. (unless an individual capital item is over £2k - advertising is not a capital outlay)
This means your sales have to be much higher than your purchases for you to benefit. This may not suit some people with low margins.
E.G.
£1k sales in a month and no purchases (pure service model) = You charge £175 VAT and only have to pay £100 in VAT! (making £75)
£1K sales & £400 in purchases = £175 VAT in, £170 VAT out (£100 to hmce & £70 on the £400 purchase) = £5 in your favour
£1k sales & £1k in purchases = £175 VAT in, £275 VAT out = MINUS £100!
As you can see, it gets bad if your margins are low.
On the refund side, it's down to the accounting method you use, cash accounting will mean that you can claw back refunds (I think) as you declare your sales as the amount that has passed through your sales ledger.
i am based in spain.
i do not pay IVA (vat to you guys) on my adwords, since it is publicity in the usa.
if you are paying vat, look at claiming your ads are shown in the us. these are exempt.
make the vat man decide which are and are not exempt.
