What is the two-thirds rule?
Goods are often supplied in the provision of a service, for example, parts in a washing machine repair job.
There are certain rules in relation to how this transaction is taxed for Value-Added Tax (VAT) purposes.
If the cost of the goods used in carrying out the work exceeds two-thirds of the total price:
- the rate which applies to the goods then applies to the entire transaction.
If the costs of the goods used in carrying out the work does not exceed two-thirds of the total price:
- the rate which applies to the service then applies to the entire transaction.
This is known as the two-thirds rule.
Source Revenue.ie
