Do You Pay Taxes on Profits from Vending Machines?
Starting a new vending machine business can be a very exciting time. You would be busy finding a good location, deciding on which items to sell, and choosing the right vending machine. Very often, amidst the excitement of computing how much you can make, one forgets the very important matter of taxes. And this is exactly what we are going to address today. Specifically, we are going to address the taxes due on profits from vending machines in Ireland.
Are Profits from Vending Machines Taxable?
The simple answer to this is yes, profits from vending machines are indeed taxable. However, the rates can be somewhat confusing at first. It would be good to take some time to fully understand so that you can charge the right amounts.
The Irish Revenue Commissioners has issued an information leaflet that identifies different rates of value-added tax or VAT that applies to food and drinks in Ireland. Most basic food items like bread, butter, and sugar are chargeable at zero rate. There are also foodstuffs that are taxable at a reduced rate. This includes egg-based bakery products like cakes or biscuits. Others, like chocolates, confectionery, and soft drinks are VAT taxable at the standard rate.
So do these rates apply to profits from vending machines? Not necessarily. All food and drink that are ordinarily chargeable at zero rate automatically goes up to the reduced rate when sold through a vending machine. Other food items are chargeable at the normal rate. Hence, cakes are taxable at a reduced rate and soft drinks are taxable at a standard rate.
How to Compute Taxes on Profits from Vending Machines
Now that the tax rate classifications are clear, you can easily compute the VAT on your vending machine items. As of this writing, the standard VAT rate in Ireland is 23%. So your profits from vending machines on products that are in the standard rate category are liable to 23% of VAT. Vending machine items in this category include foods like ice cream, crisps, chocolates, and anything with chocolate. Beverages like fruit juices, bottle waters, soft drinks, and health drinks are also in this category. Likewise, alcoholic drinks are liable at the 23% rate.
As for items that fall under the reduced rate, you will have to compute it at 13.5%. Again, this includes all food items that are ordinarily zero-rated but are sold through a vending machine. Cakes and biscuits also fall into this category.
Tax Considerations in Starting a Vending Machine Business
It is now clear that you do need to pay taxes on your profits from vending machines. Knowing this, you can plan your budget accordingly for your new venture. You will also be able to make better pricing decisions for all your items. You have to make a decent profit from your vending machines and not lose it all to taxes. To ensure this, it is vital that you partner with a trusted vending machine company.
Vending-Machines.ie has vast experience in the vending industry. We will not only provide quality vending machines but also guide you through the entire start-up process. This includes navigating the somewhat befuddling world of business taxes.
