Q:
Say I have the following order (all prices VAT-inclusive):
product1 €100 (vat standard)
product2 €80 (vat reduced)
product3 €70 (vat zero)
The company wants to offer a €10 discount.
The final price will be €240. According to VAT rules, how much standard VAT should be produced and how much reduced VAT should be produced? This will be done for Ireland but, eventually, I will need to do this for the entire EU. Is there some place in the VAT documentation that answers this?
Thanks so much.
A:
Hi
The VAT treatment will depend on the type of discount and the contractual arrangement between you and your customer. Different EC countries may also have different rules and – as with all things EC – you will have to check out the rules for each country separately. Unfortunately I can only help out a bit with the UK position, although I suspect that the rules will be similar for each country. But hopefully I can at least give you a couple of useful links to start.
Here’s the link for information on VAT and discounts in the UK: http://www.hmrc.gov.uk/vat/managing/charging/discounts-etc.htm.
You say that you will initially commence your discounts in Ireland, here’s the link to the VAT section of the Irish Revenue Service http://www.revenue.ie/en/tax/vat/index.html. I’ve had a quick look and can’t find anything about discounts but I’m sure that the information will be on there somewhere and you’ll find it when you’ve time to have a proper look.
Hope this helps you find the information that you need.
Marie