Google Adsense and VAT

[Jon12345]

I get paid commissions from Google for advertising sales using their Adsense system. They were in the US but have moved to Ireland now.

Info here: http://adsense.blogspot.com/2009/03/reports-have-gone-international.html

To make the switch to local currency reports, you'll need to agree to a new set of Terms and Conditions. Here are the main changes involved:

• The party that publishers are contracting with changes from Google Inc. to Google Ireland Limited.
• Publishers are responsible for paying any local taxes in their jurisdiction. Google will only issue VAT refunds to publishers with an address in Ireland.
• The governing law changes from California law to either English or local law.

What do I put in my Quickbooks? Zero rated? Exempt? Standard?

Thanks,

Jon

 

[nickjohnston]

To resurrect an old post, this is a confusing issue, and it'd be great to have a clear answer.

Google's statement is this... "In this case, your payments are being made by Google Ireland, a company incorporated under the laws of Ireland. In accordance with the terms of your agreement with Google, the services provided are subject to the reverse charge mechanism and so VAT is to be accounted for by the recipient, Google Ireland, per Article 196 of Council Directive 2006/112/EC. Please speak to your local tax advisors if you have further questions ."

 

[3pic]

If your a business then you update your Google profile to say you are in business and they will invoice you without VAT and you then "reverse charge" the commission by calculating the VAT on the commission at 17.5% and paying this over as output tax on the VAT return - in effect, you treat your income as a sale/as if you've sold to yourself. If you can reclaim 100% input tax, then you also reclaim the same amount VAT you just paid out as output tax, as your input tax making it a tax neutral transaction. If you cannot reclaim all your VAT (you might be an mortgage broker say), then you still pay over the output tax on the commission but cannot reclaim the input tax, thus a cost to you.

If you are not VAT registered, then you still calculate the value of VAT from Google which will still be VAT free although if you're not VAt registered this is just an administrative exercise.

The value of the google commission does go towards your VAT registration limit though, so if you say, have £68k worth of sales, if you then have £5k of Google commission/income, you reverse charge that £5k (calculate VAT, treat as a sale and declare output tax on) and treat as if you made a sale to yourself so your turnover would then be £68k + £5k = £73k and you've gone over the VAT registration threshold and so must register for VAT.

 

[nickjohnston]

Great stuff 3pic, I almost understand what to do.

 

[UKSBD]

If your a business then you update your Google profile to say you are in business and they will invoice you without VAT and you then "reverse charge" the commission by calculating the VAT on the commission at 17.5% and paying this over as output tax on the VAT return - in effect, you treat your income as a sale/as if you've sold to yourself. If you can reclaim 100% input tax, then you also reclaim the same amount VAT you just paid out as output tax, as your input tax making it a tax neutral transaction. If you cannot reclaim all your VAT (you might be an mortgage broker say), then you still pay over the output tax on the commission but cannot reclaim the input tax, thus a cost to you.

Are you confusing AdSense with Adwords?
With AdSense, we invoice Google without VAT and account for it on our EC Sales list, they then account for the VAT at their end.

 

[3pic]

Are you confusing AdSense with Adwords?
With AdSense, we invoice Google without VAT and account for it on our EC Sales list, they then account for the VAT at their end.

It is entirely possible that I am confused UKSBD!!

Is there a difference between AdSense and Adwords?. I thought they were both forms of advertising from which both parties got a cut?

Can you explain how AdSense works, I want to make sure I've not mis-lead a forum member.

 

[UKSBD]

Adwords = Google supply a service to us (internet advertising) where we reverse charge.


Adsense = We supply a service to google (internet advertising) where they reverse charge and we record on EC sales list.

 

[3pic]

Okay thanks.

So if 'we' supply a service to Google in Ireland then I guess 'we' zero rate the sale as the place of supply will be Ireland and Google have to account for VAT under reverse charge and/or monitor their VAT registration threshold - although I'd guess they were already VAT registered.

Sorry for any confusion and thanks again UKSBD for picking up on that.

 

[UKSBD]

Yes, the OP needs to make sure he has the Google Ireland VAT number
rather than the Google inc. VAT number too.
This then goes on our EC sales list.