VAT On Commissions? I'm In The UK

[MontyBa]

Hello everyone

I'm in the UK and my accountant has just told me that I need to go VAT registered in the next month or so which in itself is not a problem.

What is a problem is that the majority of my business is from revenue share and I'm not sure that operators will want to pay me my regular commission with 20% VAT on top of that. I especially don't expect this from offshore operators.

So I was wondering if any other UK affiliates are VAT registered and whether or not operators such as 888 and Bet365 for example are paying them commission like normal with the VAT on top.

Obviously I will be in touch with the necessary programs as well.

Cheers

[FictionNet]

I´ve had a few accountants over the years and they´ve always told me this revenue isn´t 'generated' in the UK so there´s no VAT applicable - especially as we are unable to invoice the casinos for this tax. Even the UK casinos are officially overseas so don´t worry about VAT. Of course, any UK-derived income (ie. Amazon.co.uk sales) would be subject to VAT, if earning above the current threshold. Not sure how much that is.

This subject has come up a few times over the years, although not for some time now so thanks for refreshing the issue. If anyone thinks my advice above is crap then feel free to correct me. I´ll cry, of course.

[MontyBa]

Hi FictionNet

I told my accountant that the majority of operators I'm dealing with are in Gibraltar and he said they're in the EU so I still have to charge them VAT. Of course he could be talking a load of rubbish and I'm still waiting for answers from a few of the managers that I'm dealing with. It would be nice if an affiliate manager from any Gib casino would give their stance on the issue.

[baldidiot]

I think I need a new accountant... The first clue should have been when I spent about 40 minutes explaining how an affiliate program worked.

Can anyone recommend an accountant or accountancy firm in London (ideally central or central SW) that specializes in affiliate marketing and/or igaming?

[Anthony-Coral]

Hi FictionNet

I told my accountant that the majority of operators I'm dealing with are in Gibraltar and he said they're in the EU so I still have to charge them VAT

Let me clarify that I am not a qualified accountant. However, a quick search turned up these (and more)

http://www.gibraltaroffshore.com/gib...mpany-faq.html

http://en.wikipedia.org/wiki/Special...nion#Gibraltar

Seems pretty conclusive that you are not liable for VAT on any earnings generated in Gibraltar

[DaftDog]

Even if you are liable to pay VAT you would not charge the program VAT over and above your commission earned. Lets say your commission was 1000 Euro, you would not invoice your affiliate program 1200 Euro, instead you would invoice your affiliate program 833.33 Euros plus 20% VAT of 166.67 Euros totaling 1000 Euros.

[Sarah_BetVictor]

Hi Montybar,

I always thought that commissions earned through bookmakers registered in Gibraltar are not liable for VAT. I have had requests from affiliates in the past that they need an official statement of affiliate earnings in a tax year to give to their accountant, ie. headed paper with a monthly breakdown of earnings signed by an affiliate manager/affiliate director however, never had to add VAT on top of commissions. Good luck

[Webzcas]

As Hodgyboy has indicated, Gibraltar whilst in the EU is outside the EU for tax purposes and therefore any earnings derived from the Rock, do not count towards your VAT Threshold.

The current VAT threshold in the UK is circa £73,000, it is important to note this is over a rolling 12 month period.

Therefore any income derived from outside the EU including Gibraltar which for VAT purposes is deemed outside the EU, these monies should not be counted towards the VAT threshold.

Any incomes in a 12 month rolling period, generated from programs within the EU are counted towards the VAT threshold. Once you go over the VAT threshold, you need to register for VAT and pay VAT on all revenue generated from within the EU.

I have just had our accountant clarify the above and she also contacted HMRC to confirm that we as a company are not liable for VAT.

But you should create a spread sheet of all revenues and keep an eye on it, as any month could put you over the VAT threshold, as it is a rolling twelve month period.

Also please note, some programs such as Bet365 pay their casino commission generated from GIB, but the Sportsbook commission is paid from within the UK and is counted towards your VAT threshold.

Confusing a little bit I know. But seriously if you are worried, get a decent accountant on retainer to sort this out for you.

Having had a compliance check from HMRC earlier this year and also correspondence concerning VAT from them, it is well worth you have all areas and bases covered. Hence our accountant is on a monthly retainer and she deals with all of this for us. One less stress.

[MontyBa]

Thanks to all for your responses.

Having spoke to the main programs that I work with, they have all given me the same answer. In addition to the links that Anthony posted above, I also found this - http://www.hmrc.gov.uk/vat/managing/international/esl/country-codes.htm

Unless I'm very much mistaken, hmrc themselves are saying that Gibraltar is exempt.

I think that my accountant has given me the false impression that I need to start charging VAT when he probably hasn't encountered anyone in this line of work before.

As for this -

Even if you are liable to pay VAT you would not charge the program VAT over and above your commission earned. Lets say your commission was 1000 Euro, you would not invoice your affiliate program 1200 Euro, instead you would invoice your affiliate program 833.33 Euros plus 20% VAT of 166.67 Euros totaling 1000 Euros.

Sorry but that's nonesense because then you would be being taxed out of your own profit twice, first VAT and then income tax. In the UK, practically everything has VAT added to it. If a shop wants to sell a TV for £500, they sell it for £600. If a builder builds an extention on your house for £20,000, he charges £24,000 for it and so on. VAT is always added.

[DaftDog]

Sorry but that's nonesense because then you would be being taxed out of your own profit twice, first VAT and then income tax. In the UK, practically everything has VAT added to it. If a shop wants to sell a TV for £500, they sell it for £600. If a builder builds an extention on your house for £20,000, he charges £24,000 for it and so on. VAT is always added.

Check with your program. You are not selling them a service at a per-determined price or rate. You are earning commission and that is how it would work with commission.

[MontyBa]

Check with your program. You are not selling them a service at a per-determined price or rate. You are earning commission and that is how it would work with commission.

No it wouldn't and I don't want to discuss that matter any further; you're giving future readers a false impression who are in the same position as me. Let's keep this on topic rather than arguing about the irrelevant.

[DaftDog]

No it wouldn't and I don't want to discuss that matter any further; you're giving future readers a false impression who are in the same position as me. Let's keep this on topic rather than arguing about the irrelevant.

I will expect an apology when I'm proven right. Please don't treat me like a moron.

[pjotter]

I will expect an apology when I'm proven right. Please don't treat me like a moron.

I'm pretty sure Ixian is right. An apology is called for...

[MontyBa]

I'm pretty sure Ixian is right. An apology is called for...

And I'm certain he's not because people just below the VAT threshold would then be earning more than the people just over the VAT threshold due to the fact that one would be paying an extra 20% out of their own pocket to the VAT man and one wouldn't. That's why it's always added on top.

If operators where VAT registered they would probably (I'm not sure) be able to claim that VAT back that they pay to affiliates anyway so it wouldn't matter to them in the long run.

[pendil]

VAT is not paid on profits.

VAT is paid on end product - what you sell to somebody,or provide a service for.

From what I understand,affiliates in UK have no VAT liabilities.

However you must register for VAT if you pass threshold of turnover yearly,or any 3 month period pro rata during year - wherever your income comes from.

Registering for VAT is actually a win win situation for UK affiliates - you can claim back all VAT charged to you for advertising and services ,and at the same time have no VAT liabilities yourself.

Betting shops in England have been operating this way for many years.

[DaftDog]

Even if you are liable to pay VAT you would not charge the program VAT over and above your commission earned. Lets say your commission was 1000 Euro, you would not invoice your affiliate program 1200 Euro, instead you would invoice your affiliate program 833.33 Euros plus 20% VAT of 166.67 Euros totaling 1000 Euros.

I contacted a UK affiliate company and this was their response:

Let’s say your commission is £1000.

- If you’re UK VAT registered (we need registration number and copy or VAT registration certificate) we’ll pay you £1200 and send you a VAT inclusive invoice automatically.
- If you’re non VAT registered we’ll pay you £1000 and won’t send you a monthly invoice, unless you request it each month.

So I admit I was wrong and won't be needing an apology from our respectful member MontyBa.

[MontyBa]

I just thought I would give this a bump to say that my accountant has now been back in touch having spoke with his VAT specialist and he has confirmed that commissions earned from companies based in Gibraltar are not liable to VAT. So if ever anyone asks the question again, you could point them to this thread.

[pokerprop]

Does anyone know if affiliate payments from Isles of Man would be subject to UK VAT? I'm in preliminary research stages, and considering establishing a UK subsidiary. I'll eventually be asking a tax attorney these questions, but sometimes easier to get answer from peers already dealing with it first. If you know the answer a response would be greatly appreciated.

[Bahounek]

just another example:

When receiving commission from AFFUTD through Moneybookers you can see the note: marketing services. Therefore you as an affiliate are promoting the final product through your channels, providing a service, which you will be eventually paid for right? = VAT needs to be added as this is a service.

Correct me if I am wrong.

[Bahounek]

Does anyone know if affiliate payments from Isles of Man would be subject to UK VAT? I'm in preliminary research stages, and considering establishing a UK subsidiary. I'll eventually be asking a tax attorney these questions, but sometimes easier to get answer from peers already dealing with it first. If you know the answer a response would be greatly appreciated.

Pokerprop this is something I am looking into as well. I plan to move the business outside EU. I will get more details and get back to you