1. Value Added Tax Calculation of VAT Liability
VAT charged on Sales less VAT incurred on Purchases
If VAT on Sales exceeds VAT on Purchases then the VAT registered trader has a VAT liability payable to Revenue
If VAT on Purchases exceeds VAT on Sales then the VAT registered trader is entitled to a refund of VAT

2. Value Added Tax Calculation of VAT Liability – Taxable Amount
Taxable amount is amount on which VAT must be charged by the business
Sales price
May include customs and excise duties, commissions, costs and charges but not VAT

3. Value Added Tax Calculation of VAT Liability – Taxable Amount
Open market value used as taxable amount when there is a non-monetary consideration
Open market value may be applied by Revenue when supply is between connected persons
Taxable amount is the cost of the good in a self-supply

4. Value Added Tax
Calculation of VAT Liability – Method of Accounting for Output VAT (VAT on Sales)
Generally, there are six VAT periods in the year
January/February, March/April, May/June, July/August, September/October, November/December
Two methods for accounting for Output VAT (VAT on Sales)

5. Value Added Tax
Calculation of VAT Liability – Method of Accounting for Output VAT
Invoice Basis
Most common basis
Account for VAT when invoice is issued, based on VAT invoice date
Date payment received from customer is irrelevant under this basis
Cannot delay accounting for VAT by delaying issue of invoice

6. Value Added Tax
Calculation of VAT Liability – Method of Accounting for Output VAT
Cash Receipts Basis – Only allowed when
Trader has turnover below €1.25 million in a 12 month period (increased to €2 million on 1 May 2014), or
Trader derives 90% or more of turnover from sales to unregistered persons
Can only account for VAT on cash receipts basis by application to Revenue and with their approval

7. Value Added Tax
Calculation of VAT Liability – Method of Accounting for Output VAT
Cash Receipts Basis
VAT rate to be applied is the VAT rate in effect on date of invoice, not when payment was received
Transactions between connected persons are excluded from the cash receipts basis
Transactions in respect of land and buildings are excluded from the cash receipts basis

8. Value Added Tax
Calculation of VAT Liability – Method of Accounting for Output VAT
Bad debts
Under the invoice basis, the VAT registered person may have to claim an input credit for amounts of VAT charged but never received
Under the cash receipts basis, the VAT registered person will never account for the bad debt