Is your online business ready for the the new VAT rate?
As part of the July Stimulus Package the Minister for Finance announced a temporary reduction in the standard rate of VAT for a 6 month period. On 1 September 2020, the standard rate of VAT will change from 21% from 23%. The rate is due to revert to 23% with effect from 1 March 2021.
How does this affect my online shop?
If you are a VAT registered business you will need to change the price of your products to reflect the reduction in VAT by 2% during this 6 month period.
How do I change the price of my products?
If you have an online shop then you will be able to manually adjust the product price (one by one) so as the shop owner you will need to allocate the time to do this across all products. If you just have buy now buttons and do not have a shop – then you may need some assistance from your web developer.
Can I not just change the VAT rate in the shop system?
Most shop owners add products to their online shop with the VAT include into the price. So there is no VAT rate set within the system – its set at the product price level.
What happens if I don’t change the VAT rate on 1st Sept 2020?
You will charging the incorrect VAT rate on goods and services which may come to the attention of the Revenue Commissioners and may have an impact on your own company accounts calculations.
What should we do be ready for the VAT change on 1st Sept 2020?
Its is advisable to a review of all of your products and prices in advance of the deadline and calculate what the new pricing will be. Then on the 1st Sept you will need to manually change the prices on all products to reflect the new 21% rate.
For further information on VAT checkout the Revenue website or contact your financial advisor.