On what amount do you charge VAT?
The amount on which Value-Added Tax (VAT) is charged is normally the total sum paid or payable to the person supplying the goods or services, in the case of the following:
- supplying goods or services
- receiving services from abroad
- making acquisitions of goods from other EU Member States.
This includes all:
It does not include the VAT chargeable in respect of the transaction.
VAT on imports is charged on the Customs value of the goods.
This means that the amount on which VAT is chargeable is not only the charge for the goods or services supplied. It also includes incidental charges incurred by the supplier which are passed on to the customer.
Please see further guidance for information in respect of the amount on which tax is chargeable.
A consultant's fee for providing a consultancy service might include their professional fee, travel and subsistence allowance, hotel accommodation, postage and stationery, and photocopying, as follows:
Calculation of VAT chargeable
|Travel and subsistence allowance
|Postage and stationery
|Amount on which VAT is chargeable
|VAT @ 23%
|Total chargeable to customer
What if the customer pays by credit card?
Where payment is received by credit card, the taxable amount is the total amount actually charged to the customer by the supplier. Amounts withheld by the credit card companies from their settlements with the traders concerned, form part of the taxable amount.
When payment is not made with money
Consideration for goods or services can be made in a number of forms, examples of which include cash and payments in kind. Payments in kind can include:
- the exchange of goods or services as consideration
- the release of an individual from an obligation.
In these cases, VAT is chargeable on the open market or arm’s length value of the goods or services received as payment for your supplies.