Welcome to WebmasterWorld Guest from 54.198.143.210

Forum Moderators: incrediBILL & martinibuster

Message Too Old, No Replies

Question on accounting for the google checks.

my account insists that I should be sending a bill to google.

     
7:12 am on Jul 22, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Nov 6, 2002
posts:702
votes: 0


Hi all,

I am looking to see how other people deal with this.

I have been in the adsense program 3 months now. I got my first check a couple of days ago.

I then realised that I am using a business account to recieve the check into. That means (here in Spain) that I need to send a bill for my services to Google (they are paying me, when I pay them I get a bill from them).

What do others do with these google checks when going into a business account and not a personal account?

7:27 am on July 22, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Oct 3, 2003
posts:792
votes: 0


I create an invoice in my accounting software (QuickBooks), but I don't actually send it to them.

I think the main reason I started doing this is that it makes it easier to categorize the income. I enter the number of impressions as the "Quantity" and the amount paid as the total. The software fills in the "Rate/Unit Price" which is the effective CPM. Then I can easily compare it with FastClick, Tribal Fusion, and other earnings.

9:49 am on July 22, 2005 (gmt 0)

Preferred Member

10+ Year Member

joined:Mar 5, 2004
posts:433
votes: 0


Like john_k, I create an invoice in my accounting software, but I don't actually send it to them.

I'm in the EU too (Netherlands) and we're required to send invoices by VAT legislation, but that doesn't apply to customers of advertizing services located in the US. We don't have to charge VAT and don't have to send an invoice, therefore. Doublecheck your assumption.

10:40 am on July 22, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Nov 6, 2002
posts:702
votes: 0


Hi Arrowman,

so if the if the service provider is based in the USA you do not have to send a bill, but by making a bill out, and not sending it, you get to discount the vat.

ok i think i can understand that (please feel free to correct me).

but by not actually sending the bill are you not violating local tax law?

10:48 am on July 22, 2005 (gmt 0)

Senior Member from MY 

WebmasterWorld Senior Member vincevincevince is a WebmasterWorld Top Contributor of All Time 10+ Year Member

joined:Apr 1, 2003
posts:4847
votes: 0


and not sending it, you get to discount the vat.

So far as I'm aware Google Adsense payments do not include VAT, please correct me if I'm wrong.

10:57 am on July 22, 2005 (gmt 0)

Full Member

10+ Year Member

joined:Nov 27, 2001
posts:301
votes: 0


there is no VAT on adsense payments.

If you raise the bill and keep a record then who on earth knows it hasn't been sent?

So i don't see what the problem is has long as you actually raise it.

11:04 am on July 22, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:May 22, 2002
posts:1001
votes: 0


The problem is that under local tax laws in most EU countries, adsense payments are assumed to be payment for services rendered (in this case, adverts on your site). So, the tax office takes 16% as VAT (IVA), and requires you to issue an invoice.

If you issue the invoice, and you have a VAT surplus in your company, then you can offset that 16% VAT against your surplus, thus claiming it back.

11:13 am on July 22, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Nov 6, 2002
posts:702
votes: 0


exactly.

but by declaring (giving to the tax man) a bill that you do not send you are in violation of tax law.

ok so the probability of being caught is very small.

if i start to do this i will always have a vat rebate in my favor (if the adsense checks stay hte size they are).

12:06 pm on July 22, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:June 1, 2004
posts:1987
votes: 0


On similar subject:

Don't know if this applies to EU but has anyone investigated whether adsense income can be considered 'passive' income. This might be similar to when you write a book or a song and then subsequently get income from the sales and royalties.

This might be income at a lower tax rate?

4:21 pm on July 22, 2005 (gmt 0)

Preferred Member

10+ Year Member

joined:Mar 5, 2004
posts:433
votes: 0


but by making a bill out, and not sending it, you get to discount the vat.

No, like I said, we're not required to charge VAT on Adsense earnings. I enter the invoice in my accounting software to add the Adsense earnings to my company's turnover.

but by not actually sending the bill are you not violating local tax law?

No, sending a bill is mandatory only for VAT invoices.

The problem is that under local tax laws in most EU countries, adsense payments are assumed to be payment for services rendered (in this case, adverts on your site). So, the tax office takes 16% as VAT (IVA), and requires you to issue an invoice.

Although I can't speak for other EU countries, I don't think this is correct. There's a whole bunch of rules about which services are and are not subject to VAT, and this is based on common EU directives these days.

There are exceptions for services rendered outside the EU and specific exceptions for advertisement services. IIRC, the exception for advertisement services makes the US the "place of service" ("location of service"?) and some other rule says you're not required to charge VAT for services rendered in the US.

Most tax handbooks don't even cover this, and I got some help from my local tax office, that pointed me to the specific exception for advertisement services in the VAT law.

Again, I can't speak for other EU countries, so check with your accountant or tax office. But do insist they check deep down into the exceptions on exceptions on exceptions.

And if all of this is different in your case, and you are required to charge VAT, you should charge it and Google should pay it and get it reimbursed. That's how VAT works.

4:26 pm on July 22, 2005 (gmt 0)

Senior Member from MY 

WebmasterWorld Senior Member vincevincevince is a WebmasterWorld Top Contributor of All Time 10+ Year Member

joined:Apr 1, 2003
posts:4847
votes: 0


So, the tax office takes 16% as VAT (IVA), and requires you to issue an invoice.

Although I can't speak for other EU countries, I don't think this is correct.

What I understand, and please check for yourself, from the Inland Revenue is that there is no VAT on Adsense, there's nothing you can reclaim, or deduct etc.

And what I believe from my understanding of VAT is that if VAT were due Google would have to pay you your Adsense with VAT on top, and you'd then be paying that VAT portion to the tax office. (The VAT is or would be in addition to your Adsense earnings, not a part of it). This is the way Tradedoubler works, as I remember.

8:41 pm on July 22, 2005 (gmt 0)

New User

10+ Year Member

joined:June 13, 2005
posts:11
votes: 0


I'm in Malta. I create the invoice and send them to the rubbish bin. :)
But I think it is quite important to use personal account otherwise, the tax will be charged.
9:46 pm on July 23, 2005 (gmt 0)

Preferred Member

10+ Year Member

joined:Mar 5, 2004
posts:433
votes: 0


I'm in Malta. [...] use personal account otherwise, the tax will be charged.

Hey, what's the weather like in Malta?

9:52 pm on July 23, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:May 22, 2002
posts:1001
votes: 0


Although I can't speak for other EU countries, I don't think this is correct. There's a whole bunch of rules about which services are and are not subject to VAT, and this is based on common EU directives these days.

While I admit that I didn't pursue this too deeply (I have always had to pay VAT, so getting some back was useful) thats the way my Spanish accountants advised me to handle it after checking with Hacienda.

10:13 am on July 24, 2005 (gmt 0)

Senior Member

WebmasterWorld Senior Member 10+ Year Member

joined:Nov 6, 2002
posts:702
votes: 0


so sananet what are you doing in spain,

i am based in la coruņa, spain.

1:11 am on July 25, 2005 (gmt 0)

Full Member

10+ Year Member

joined:Dec 3, 2002
posts:260
votes: 0


I create an invoice in my accounting software (QuickBooks), but I don't actually send it to them.

I do the same, but use a sales receipt instead of an invoice. A sales receipt is used where you receive full payment at the time of the sale. It's not much different to an invoice but it's one 'step' instead of two i.e. an invoice needs to be generated and then you need to enter the payment.

 

Join The Conversation

Moderators and Top Contributors

Hot Threads This Week

Featured Threads

Free SEO Tools

Hire Expert Members