Services taxable at the rate of the goods (the two-thirds rule)

Updated on February 8, 2022

What is the two-thirds rule?

Goods are often given as part of a service, like parts for a washing machine repair job.

Some rules govern how this transaction is taxed for Value-Added Tax (VAT).

Note

This means that VAT isn’t included in the numbers or costs you see.

If the cost of the goods used to do the work is more than two-thirds of the total price:

The rate that applies to the goods then applies to the whole deal.
Costs for goods used to do a job don’t have to make up two-thirds of the total price:

The rate that is charged for the service is then charged for the whole transaction.
Two-thirds rule:

Example
Services have been taxed as goods, so they pay the same amount of money.
Amount: There was a direct quotation for a guitar repair job that was €300, plus VAT, or about $400.
How it has been made:
At 23%, the cost of raw materials is more than double what it would be without them (VAT exclusive)
€220
Overheads cost €20. People who work: £20. This is how much money I made: £80.
Things you need to make cost $220. (VAT exclusive) It ends up costing more than pair of the full retail price to buy it (VAT exclusive)

It costs €69 (€300 x 23%) to pay VAT.

Here are a few services that don’t have to be approved by two-thirds of the people who use them.

People who work on and maintain cars and farm equipment.
A type of construction service where the main contractor pays VAT on the work done by subcontractors.
Construction services for two people who are connected.

Overview

Many goods and services can be found by using the Valuation Tax (VAT) rates database. You can look through the long list of goods and services that can be sorted in alphabetical order or searched for by typing a word in the search box.

Database: There is a list of the VAT rates in there based on what people are doing in the present time. Each time new information comes out, we make sure the information is correct before we use it.

What does the law say? You should look at it.

The Value-Added Tax Convergence Act of 2010 is the law that says how products and services have been taxed. It was passed in 2010.

Then, search for them. B has A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, and W. also X and Z.

VAT rates now:
VAT rates now:
Standard rate: Date from the standard rate ( percent )
The rate has been slashed ( percent )
It was also cut ( percent )
The rate at which livestock are being bought and sold ( percent )
Flat-rate payment percentage for farmers who grow food ( percent )
1 January 2022

13.5

9

4.8

5.5

March 1st, 2021

13.5

9

4.8

5.6

1 January 2021

13.5

9

4.8

5.6

During the first week of September 2020, 21

13.5

9

4.8

5.4

One January 2020

23

13.5

9

4.8

5.4