UK/Ireland Affiliates & VAT

[IREAffiliate]

If your affilate income from one or more sportsbooks was:

1,000 affiliates x €350 (average loss) x 30% (affiliate commission) = payment of €105,000 annually.

What is the vat treatment on this and how do you handle this in practice?

Thanks.

[FintanCostello]

It depends
1) are you VAT registered and in what country?
2) What country is the operator you are billing registered in? (and i'll assume they are VAT registered)

So three simple scenarios to show how it works
Scenario 1:
Let's assume you are VAT registered in Ireland and are invoicing a bookie in the UK who is VAT registered
As it's cross-border and you are both VAT registered there is no VAT added to the invoice

The rationale in VAT law is that the Bookie is unable to reclaim the VAT as its cross-border so no VAT is charged. You need to list their full company details and VAT number on the invoice

Scenario 2:
You are VAT registered in Ireland and invoicing an Irish Bookie who is VAT registered
As it's the same country you charge VAT on the invoice

Scenario 3:
You are in Ireland and not VAT registered and invoicing and Irish (or UK bookie) who is VAT registered
You do not charge VAT as you are not allowed too (double check what the thresholds are before you have to register for VAT)


In practise, majority of bookies will "auto-invoice" you which means their system automatically generates the correct paperwork and VAT treatment BUT it's entirely on your shoulders (in the eyes of Revenue Commissioners) to make sure the paperwork is correct.

Final point on your maths

1,000 players x 350 average loss (this is a high average for UK sportsbook) = 350,000 EUR Gross Gaming Revenue (GGR)
The bookies will then deduct "costs" from the GGR (payment processing fees, free bets, software fees etc). It can vary based on the operator (so always worth testing) and can be as high as 50%, most will tell you up-front (some wont know)

So your revenue share is calculated on the Net Gaming Revenue (NGR).
So it's GGR-Admin Fees = NGR
NGRx30% (affiliate commission) = your earnings

[baldidiot]

What is the vat treatment on this and how do you handle this in practice?

Are you registered for VAT?

[IREAffiliate]

Are you registered for VAT?

Not yet. I'm starting out and have not reached the VAT threshold in Ireland yet. I'm just looking to get the full picture at the moment.

Scenario 1:
Let's assume you are VAT registered in Ireland and are invoicing a bookie in the UK who is VAT registered
As it's cross-border and you are both VAT registered there is no VAT added to the invoice

The rationale in VAT law is that the Bookie is unable to reclaim the VAT as its cross-border so no VAT is charged. You need to list their full company details and VAT number on the invoice

Thank you for this reply, it is very useful.

Lets assume in the above scenario my earnings are €100,000 in 2021.

I have to self account for the VAT on this income received from the UK bookmaker.

I assume this is vatable income in Ireland at 23%? I have to check this.

So there is an output VAT credit of €23,000 upon recipet of the €100,000 payment and I assume that I can claim an input credit of €23,000 assuming this is the only income so that this affilite payment is VAT neutral?

Scenario 2:
You are VAT registered in Ireland and invoicing an Irish Bookie who is VAT registered
As it's the same country you charge VAT on the invoice

In this scenario when the net gaming revenue is €100,000 is the payment received from the bookmaker €100,000 + VAT or is it inclusive of VAT so that the Net Gaming Revenue is in effect €100,000 / 1.23 = €81,300?

(€81,000 + VAT @ 23% = €100,000)

Basically how do bookmakers pay their VAT registered affilaites - is the NGR inclusive or exclusive of any VAT the affiliate is obligated to charge?

Thanks again.

[tufty]

A few things to consider:

Almost no bookies invoice out of a VAT location. Nobody I deal with in the UK does. For instance even Bet365 is 'based' out of Gibraltar for affiliate payments (which is outside of EU VAT system). So it doesn't apply to any invoices (outside scope).

If you are in Europe but not in the UK - The UK is not in the EU VAT system anymore (a little thing called Brexit). It is a 'third country' for VAT like Australia or the U.S. or the Moon. It used not to apply with the rest of the EU because of the reverse charge procedure (which someone outlines above). Since January 1st 2021, it doesn't apply because it is 'outside scope' of vat entirely. The reverse charge no longer exists in relation to the UK. It would apply if you are in an EU country and dealing with another EU country but not the UK.

I have been VAT registered in UK for many years. In reality, if you are VAT registered it is very unlikely you will deal with many betting firms in the EU or UK who are working within a VAT jurisdiction as far as affiliate payments are concerned. You just get your VAT back on purchases. Almost everything else will be 'outside scope'. Feel free to provide an example situation if you are unclear on this - it could be reverse charge, for example, if you are Ireland and they are Malta (I know Malta was in EU VAT system. I am unsure now as I don't deal with any firms there anymore).

Paddy Power / Betfair are within Ireland for VAT and as a UK company it was reverse charge for me before Jan 1. Now it is 'outside scope' for me. Both situations boil down to no VAT. For you in Ireland, you would receive VAT from them (if you were vat registered) as they too are based in Ireland for their affiliate payments.

Despite the apparent advantage of being VAT registered it is a regulatory headache for newbies. I would strongly advise that you don't even think about it until it is past the time when you should have registered. 99% or more of affiliates just starting out will never need to be vat registered. It is the last thing you should be doing, not the first. Make the money first and then get in a position where it is a mandatory requirement.

[Sherlock]

The VAT is a hassle, but in the EU I am fairly confident anyone who is receiving payments from abroad (e.g. and especially from other EU member state than the one where the person/comp is residing) MUST be VAT registered. There is no threshold. Even receiving 1 EUR from abroad = mandatory VAT registration. Like usually people/companies have to register only above certain amount like 50K/year, but this does not apply when even one partner who pays you is abroad.

This changed maybe 7 years ago? I do not know because it does not apply to me, but small freelancers making literally hundreds of EUR/year were complaining about it. It was only in one EU state, but I am fairly sure it applied to all (there were the problematic UK child maybe they had some exception).

That said I do not think it is enforced, but anyways it is a law.

[tufty]

The VAT is a hassle, but in the EU I am fairly confident anyone who is receiving payments from abroad (e.g. and especially from other EU member state than the one where the person/comp is residing) MUST be VAT registered. There is no threshold. Even receiving 1 EUR from abroad = mandatory VAT registration. Like usually people/companies have to register only above certain amount like 50K/year, but this does not apply when even one partner who pays you is abroad.

This changed maybe 7 years ago? I do not know because it does not apply to me, but small freelancers making literally hundreds of EUR/year were complaining about it. It was only in one EU state, but I am fairly sure it applied to all (there were the problematic UK child maybe they had some exception).

That said I do not think it is enforced, but anyways it is a law.

I discovered when paying various writers based in other EU countries that the requirements do vary considerably per country. What you outline was not the case in the UK prior to Jan 1. It was just based on quite a high threshold. Yet I had a writer living in Spain, not earning a lot, who had to be registered. So certainly the requirements varied by the EU country. I don't know the criteria in Ireland, the OP's location.

[tufty]

Sherlock, the final line might mean, yes, he has to register asap, though I am still unclear given the way it is worded:

From: https://www.revenue.ie/en/vat/vat-re...hresholds.aspx


What are the VAT thresholds?

Value-Added Tax (VAT) registration is obligatory when your turnover exceeds or is likely to exceed the VAT thresholds. The thresholds depend on your turnover in any continuous 12 month period.
The threshold for distance- selling relies on your turnover in a calendar year.
If the turnover is less than a threshold limit, you may elect to register for VAT.
The principal thresholds are as follows:

• €37,500 in the case of persons supplying services only.
• €35,000 for taxable persons making mail-order or distance sales into the State.
• €41,000 for persons making acquisitions from other European Union Member States.
• €75,000 for persons supplying goods.
• €75,000 for persons supplying both goods and services where 90% or more of the turnover is from the supplies of goods. However, while all goods and services are part of the turnover, the 90% does not necessarily include all goods sold.
• The 90% figure does not include goods which you:
  
  • sold at the standard or reduced rates
  • and
  • manufactured or produced from zero rated materials.

A person, while not established in the state, needs to register and account for VAT if that person supplies:

• taxable goods to ‘taxable customers’ in the State
• or
• services to ‘taxable customers’ in the State.

This applies irrespective of the level of turnover.

[FintanCostello]

Basically how do bookmakers pay their VAT registered affiliates - is the NGR inclusive or exclusive of any VAT the affiliate is obligated to charge?

The revenue quoted in the affiliate system is ex-VAT so using your example it's 100k+VAT

HOWEVER
As others have said 99% of bookies will be operating outside of Ireland / No-VAT jurisdictions. So even PaddyPower as the easy Irish example will probably have an invoice address of the Isle of Man so no VAT will be charged

So your rule of thumb is (as long as you are registered for VAT);

• If they have an invoice address that is outside of Ireland then you don't charge VAT
• f they have an invoice address that is in Ireland then you do charge VAT

[tufty]

As others have said 99% of bookies will be operating outside of Ireland / No-VAT jurisdictions. So even PaddyPower as the easy Irish example will probably have an invoice address of the Isle of Man so no VAT will be charged

Paddy Power Betfair is about the only exception. They currently do invoice from Ireland so VAT would apply.

So your rule of thumb is (as long as you are registered for VAT);

• If they have an invoice address that is outside of Ireland then you don't charge VAT
• f they have an invoice address that is in Ireland then you do charge VAT

This is true. However If they are out of Ireland it is either "No Vat" and nothing appears on the VAT return or, if they are in part of EU VAT system (like Malta), "reverse charge" so VAT does appear on the VAT return in two places, cancelling itself out and netting out to zero vat.