Claire McNamara, Tax Advisor

The Minister for Finance, Public Expenditure and Reform Paschal Donohoe T.D delivered his first Budget on 10th October 2017 which concentrated more on expenditure than on tax changes. The Minister announced a number of positive measures to assist small and medium sized enterprises prepare for “Brexit” as well as confirming Ireland’s commitment to the 12½% corporation tax rate. We are pleased to bring you our summary of the tax measures set out in Budget 2018.

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Annette Nellen

A review of a few recent sales tax advisory opinions, issued by the New York State Department of Taxation and Finance, reminds us of the complexities of sales tax exemptions and special definitions of taxed items.

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The value-added tax (VAT) has been adopted by every developed country and most developing countries in the world. There is, however, one exception –The United States. That may be changing as there is currently discussion regarding its adoption in the U. S.

The value-added tax is a tax on goods and services and is collected at every step in the production chain. This is unlike the sales tax, which is paid only on retail sales. In a sense it is similar to sales taxes that are currently in place in 45 states as it is a consumption tax. VAT rates, obviously, vary from country, but in a survey of OECD countries, the rate varies from a low of five percent to a high of 24.5 percent.

How the VAT Works

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If you’re a provider of digital services to customers in Japan, please be aware that the changes being introduced on 1st October 2015 may affect you.

Old Rules

Under the Consumption Tax Act (Act No. 108 of 1988), a service rendered in Japan is subject to Consumption Tax which is equivalent to VAT (i.e. Value Added Tax).

The criteria for determining whether a service is rendered inside or outside Japan varies depending on the nature of the service.

Under the current rules (i.e. pre October 2015), the tax treatment relating to the provision of e-commerce services, such as e-books, online games, internet delivery of music, etc. is Read More

The value-added tax (VAT) has been adopted by every developed country and most developing countries in the world. There is, however, one exception –The United States. That may be changing as there is currently discussion regarding its adoption in the U. S.

The value-added tax is a tax on goods and services and is collected at every step in the production chain. This is unlike the sales tax, which is paid only on retail sales. In a sense it is similar to sales taxes that are currently in place in 45 states as it is a consumption tax. VAT rates, obviously, vary from country, but in a survey of Organisation for Economic Co-operation and Development (OECD) countries, the rate varies from a low of five percent to a high of 24.5 percent. Read More

One of the biggest problems envisaged with the MOSS systems is identifying the location of the customer.

It is essential for suppliers to correctly identify the customer’s location/permanent address/usual residence so they can charge the correct VAT rate applicable in that member state.

For most telecommunication, broadcasting and electronically supplied services, it will be obvious where the customer resides. The decision about the place of supply of those services should be supported by two pieces of non-contradictory evidence including credit card details and a billing address for example. Read More

What needs to be considered prior to the introduction of the MOSS Scheme on 1st January 2015 by businesses already established in Ireland or thinking about establishing in Ireland?

• It is essential to examine your contract to establish who exactly is paying you and if your customer is a taxable or non taxable person. This is particularly important in the context of undisclosed agents/commissionaire structures, etc.

• You must determine where your B2C customers are located. Your business may require additional contractual provisions and amendments to your systems to include this information.

• It is important to examine the impact of the different VAT rates in each E.U. member state Read More

From 1 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private, non-taxable individuals and non-business customers will be liable to VAT in the customer’s Member State.

The current place of supply/taxation is where the supplier is located, but from 1st January 2015 this will move to the place of consumption or the place where the consumer normally resides or is established.

Suppliers of such services will need to determine where their customers are established or where they usually reside. They will need to account for VAT at the rate applicable in that Member State. This is a requirement regardless of the E.U. state in which the Supplier is Read More

When we talk about “electronically supplied services” we mean:

• Website supply, web hosting, distance programme and equipment maintenance.

• Software supply and upgrades.

• Supply of distance teaching.

• Supply of film, games and music.

• Supply of artistic, cultural, political, scientific and sporting as well as entertainment broadcasts and events. Read More

For many businesses moving to Ireland, especially I.T. companies, a considerable amount of research and planning into our tax regime is usually carried out in advance. From experience, however, the question these companies rarely ask themselves is “what are the key VAT issues affecting our company if we locate to Ireland?

The current Irish VAT rules are as follows:

• The place of supply for businesses established in the E.U. who provide electronically supplied services to private consumers within the E.U. is the E.U. member state in which the supplier is established. For example, if an I.T. company established in Ireland supplies digital materials via the market to a private consumer living in France, the place Read More

TaxConnections Blogger Diane Yetter posts about Value Added Taxes Both Sales Tax and Value Added Tax (VAT) can present a number of challenges to tax practitioners who are well versed in one, but not the other. To begin, the basic structures of how sales tax and VAT are imposed are largely different. But once you delve a little further into each one, you may notice that the terminology used looks foreign and unfamiliar. Sales tax and VAT have different terms for essentially similar concepts, but sometimes the concepts themselves are handled altogether differently. We’ll take a look at some of the language and terms used in sales tax and VAT, how they’re similar and what makes them different.

Nexus vs. Permanent Establishment

In the U.S., nexus is the basic concept of whether a company has sufficient presence in a state which then requires them to collect sales or use tax.  Nexus refers to links, connections, or contacts between a political jurisdiction and a taxpayer. If a taxpayer has sufficient nexus with a state, it is deemed to be “doing business” in that state and will be liable for the state taxes.  In VAT countries, a permanent establishment for VAT purposes is a factual inquiry.  It could include: having a facility located in the country, bookkeeping facilities located in the country, and the ability to Read More