EIM15510 - Value Added Tax: inter-relation with earnings and expenses: VAT and remuneration paid for services to certain professional persons

If a person carrying on a trade, profession or vocation accepts an office, any remuneration they receive in respect of services supplied by them as the holder of the office is chargeable to VAT (Section 47(4) VATA 1983).

Remuneration paid to such a person may be chargeable to income tax as employment income, as well as to VAT. In such a case, the amount payable by the company to which the services are provided will depend upon the terms of the contract. But the earnings to which PAYE is applied should not include the VAT element of any payment. See example EIM15515.

See also EIM02500 regarding Extra-Statutory Concession A37, under which certain director's fees received by members of a professional partnership can be taxed as Trading Income instead of as employment income.