{"id":8839,"date":"2023-10-16T13:29:04","date_gmt":"2023-10-16T12:29:04","guid":{"rendered":"http:\/\/okodigital.wpengine.com\/?p=742"},"modified":"2023-10-16T13:29:04","modified_gmt":"2023-10-16T12:29:04","slug":"adsense-vat-explained","status":"publish","type":"post","link":"https:\/\/cool.co\/supply-side-platform-home\/adsense-vat-explained\/","title":{"rendered":"AdSense VAT explained"},"content":{"rendered":"<p><a href=\"https:\/\/oko.uk\/\"><span style=\"font-weight: 400\">OKO<\/span><\/a><span style=\"font-weight: 400\"> works with Google AdSense publishers from all over the world, but has a particularly strong customer base in Europe, including in the UK. That means that we do occasionally receive a slightly panicky phone call from website owners who\u2019ve earned significant AdSense revenue and are suddenly aware that they have not been paying value-added tax (\u201c<\/span><a href=\"https:\/\/taxfoundation.org\/taxedu\/glossary\/value-added-tax-vat\/#:~:text=A%20Value%2DAdded%20Tax%20(VAT,of%20a%20good%20or%20service.\"><span style=\"font-weight: 400\">VAT<\/span><\/a><span style=\"font-weight: 400\">\u201d) on those earnings.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Google AdSense does have a slightly unusual VAT set-up. The best advice is to talk to a qualified accountant about the situation, mentioning that AdSense uses the <\/span><a href=\"http:\/\/www.vatlive.com\/eu-vat-rules\/reverse-charge-on-eu-vat\/\"><span style=\"font-weight: 400\">VAT Reverse Charge<\/span><\/a><span style=\"font-weight: 400\"> (or \u201ctax-shift\u201d) mechanism.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Although I\u2019m not an accountant, I have been receiving <\/span><a href=\"https:\/\/oko.uk\/topic\/adsense\"><span style=\"font-weight: 400\">AdSense<\/span><\/a><span style=\"font-weight: 400\"> payments to a VAT-registered business for over a decade.\u00a0 I have, then, been through these issues myself (including with several accountants and two VAT inspectors) and can share my own understanding.<\/span><\/p>\n<h2>What is the VAT reverse charge mechanism?<\/h2>\n<p><span style=\"font-weight: 400\">The <\/span><a href=\"https:\/\/www.globalvatcompliance.com\/globalvatnews\/faqs\/what-is-the-reverse-charge-mechanism\/#:~:text=The%20principle%20of%20the%20Reverse,which%20he%20is%20not%20established\"><span style=\"font-weight: 400\">reverse charge mechanism<\/span><\/a><span style=\"font-weight: 400\"> is a way of handling VAT on certain B2B services supplied cross-border.\u00a0 The aim of the system seems to be to ensure that VAT ends up being paid into the correct country\u2019s coffers when one business buys services from a business in another EU member state, but those services are delivered in the customer\u2019s country rather than the suppliers.<\/span><\/p>\n<h2>Why do reverse VAT charges apply to AdSense?<\/h2>\n<p><span style=\"font-weight: 400\">This is a very good question \u2014 and some accountants may answer that question with \u201cit shouldn\u2019t.\u201d It\u2019s complex, but the general takeaway is that because AdWords in Europe are operated via Google Ireland, the sales are said to have \u201chappened\u201d there. That\u2019s where the end user actually ends up paying VAT, and therefore where VAT revenues should end up.<\/span><\/p>\n<h2>Do UK publishers need to pay VAT on AdSense earnings?<\/h2>\n<p><span style=\"font-weight: 400\">Yes, it\u2019s possible to be <\/span><a href=\"https:\/\/www.captureaccounting.com\/can-i-be-taxed-on-my-google-adsense-earnings\"><span style=\"font-weight: 400\">taxed<\/span><\/a><span style=\"font-weight: 400\"> for Google AdSense in the UK. UK-based publishers who are VAT-registered do not need to pay VAT on their AdSense revenue \u2014\u00a0 the VAT has been accounted for by Google already. It should, however, be recorded as 0% VAT on the VAT return.<\/span><\/p>\n<p><span style=\"font-weight: 400\">This revenue does, though, still count towards your VAT threshold, and could also cause you to pay more VAT if you are on the flat-rate VAT scheme.<\/span><\/p>\n<p><span style=\"font-weight: 400\">As the \u201csale\u201d is to an EC Country (ie, to Google in Ireland) it should also appear on an EC Sales list. If you submit your return online you can request that \u201cEC Sales List\u201d is added as a service on your account.\u00a0 I don\u2019t believe that the EC Sales list is a requirement unless HMRC requests it, but it could be worth offering to do this. Without submitting one quarterly, your return can look suspicious and could contribute to you getting an inspection<\/span><\/p>\n<h2>Do AdSense publishers in Ireland need to pay VAT?<\/h2>\n<p><span style=\"font-weight: 400\">Publishers in Ireland who are registered for VAT need to charge Google Ireland for the appropriate VAT on the revenue they generate. There is more about this in the <\/span><a href=\"https:\/\/support.google.com\/adsense\/answer\/1322031?hl=en\"><span style=\"font-weight: 400\">AdSense help pages<\/span><\/a><span style=\"font-weight: 400\">, including how to raise a VAT invoice to Google Ireland for those that need to.<\/span><\/p>\n<p><span style=\"font-weight: 400\">AdSense can be a nuanced topic with a lot of ground to cover &#8211; for some of our other discussions on the service, check out <\/span><a href=\"https:\/\/oko.uk\/topic\/adsense\"><span style=\"font-weight: 400\">our blog.<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>OKO works with Google AdSense publishers from all over the world, but has a particularly strong customer base in Europe, including in the UK.<\/p>\n","protected":false},"author":1,"featured_media":9271,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[2],"tags":[13,14],"class_list":["post-8839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tips","tag-adsense","tag-policy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>AdSense VAT explained | Supply-Side Platform | COOL Media (formerly OKO Digital)<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cool.co\/supply-side-platform-home\/adsense-vat-explained\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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