Teknovis

I heard of an interesting situation in a small Irish technology company recently. The company is successful, and it generates a small profit. In previous years some of this profit was redistributed to employees in the form of a bonus.

However, this year management decided to do a cost-benefit analysis on these bonuses. It was not a surprise that they found it was very bad value, due to the punitive income tax rates in Ireland. See Bruton criticises high income tax rates for an explanation, and bear in mind that this does not consider employer’s PRSI. There is roughly 4€ of benefit to the employee for every 10€ spent by the company.

So instead the management allowed employees to choose from a list of alternative incentives that would not incur a tax liability. Some of these incentives included:

• Additional annual leave
• Additional investment in informal employee education and training
  • Travel and accommodation for attending foreign trade shows and conferences
  • Purchasing of new hardware relating to the business (smart phones, tablets, laptops)
• Improved office facilities
  • Free food
  • The creation of a recreational zone
• Donations to charities of the employees’ choosing

There were more, but I cannot remember them all now.

Unsurprisingly, not even one person choose to receive a bonus! So now the government is not going to get even a single cent of income tax from the potential bonus pool. Furthermore, this means that the company’s total income tax bill this year will be the lowest in many years.

So what is the moral of this story? There are two!

Firstly, there are many rewards that employers can offer employees that have a one-to-one cost-benefit balance. It is just a matter of thinking creatively!

Secondly, that by continually increasing income tax rates the government is taking a larger percentage of a smaller amount of money!

Tags: Ireland, Tax

It is getting close to that time of the year when we all start buying Christmas presents! I have not started yet, but more about this in a few weeks time!

I have bought many things from Komplett in the past. I always found it good value, and I thought that the service was good.

However, I have had two incidents in the past few months that are making me rethink this. In both cases I had to email customer service within 24 hours of ordering. In the first case my order actually arrived before customer service responded to me, telling me that my order would be shipped soon. In the second case I got billed several times for a single order, according to my online backing statement. They problem was acknowledged, and I was refunded, but again it took weeks.

The other thing that is making me think about bringing my business elsewhere, is that Komplett charge me the Irish VAT rates. I consider these are excessively high, and hence I normally purchase from low VAT countries.

Tags: Komplett, Tax

I have almost completed my Christmas shopping for 2009. I did all of this online for the second year in a row! (Last year’s shopping is described in Online Christmas Shopping 2008.)

I did not buy a single item in Ireland this year, and this was mainly due to the ridiculously high costs. I understand that part of this is due to the higher VAT on items in Ireland (see Online Shopping just got Cheaper), but I also think that retailers are still ripping-off consumers. Indeed, the most expensive single item I bought was a piece of Japanese electronics. The Irish price was over 50%  more expensive than the price I bought it for abroad!

While I am writing about shopping, I came across a very entertaining online shop – http://producten.hema.nl/ (You need sound, and a small amount of patience, for this :D )

Tags: Ireland, Tax

I read an interesting article about the Irish Government attempting to indirectly tax all computers with Internet access earlier this week. If this is true, I think that it would be a disastrous decision for Ireland!

The full article is New Irish Internet Tax?, and there is more discussion in New Irish Internet Tax?.

Tags: Ireland, Tax

I recently came across a useful Irish income tax calculator called taxcalc.eu.

It has been updated recently to reflect the continuously changing income tax rates. However, I cannot attest to its accuracy :o

Tags: Ireland, Tax

I read two interesting articles in the paper earlier this week about Irish people and shopping online.

The first article contains the results of a survey of 1,000 Irish people. The main finding was that Irish consumers spent an average of 1,700€ online in 2008, and that approximately a quarter of these people expect to spend more online in 2009. I certainly spent more than the average online in 2008, but I am probably in the majority who do not believe that this will increase in 2009 :o

Another interesting finding of the survey was that 90% of shoppers believe that they can save money by shopping online. I am certainly agree with this from my experience, and the recent increase in the Irish VAT rate has only exasperated the price differences!

The full article is Shoppers spent average €1,700 online in 2008.

The second article, Downturn speeding up revolution in the way we shop, argues that speed, adaptability, and agility, are the key business traits that will enable companies to survive the current economic downturn. The author then proposes that technology will be the key enabler of these business traits. It is interesting reading, and I share the author’s sentiments!

Tags: Ireland, Tax

I did all my online Christmas shopping this week. It went very well, and I must admit that I love the comfort of shopping in my own time from my own home. I am the sort of person that researches every purchase online, thinks about it some more, and eventually purchases. Visiting real shops with a list of things to buy is an experience that I try to avoid! Now I hope that all my presents arrive soon!

I bought lots of presents on Expansys, PhotoBox, and Play (which has the bonus of being VAT free). I also bought some presents on Asos, which was my first time to buy clothes online! I really like all of these websites because they price in euro even though they are not based in the eurozone.

It really annoys me when online retailers expect Irish customers to use the UK versions of their websites. Yes – we speak the same language, but we use a different currency! I think it is just pure laziness on their behalf!

Amazon is a perfect example of such an online retailer. It has a French website in euro, a German website in euro, and an English wesite in pounds :(

Amazon Ireland

Indeed, Amazon’s approach to the EU market is very limited.

Nevertheless, I decided to give it a try this year since the pound is so weak compared to the euro. I wanted to buy a small electronics device, and the price was really good. It was only when I went to buy the item that I realised that Amazon do not ship it outside of the UK :( I understand that this might be due to the fact that Amazon does not want to be responsible for collecting old electronic devices as required by the WEEE (Waste Electrical and Electronic Equipment) directive. So I abandoned shopping with Amazon :(

There seems to be plenty of other people who are unhappy with Amazon also according to Amazon behaving badly and Amazon UK withdraws John Duignan’s Scientology exposé “The Complex” from sale “for legal reasons”.

Finally, it appears that I am not the only person shopping online this week! According to “Busiest day” for online shopping last Monday was the busiest day in the year for online sales in the UK. The busiest hour was predicted to occur between 13:00 and 14:00 when £28 million worth of goods were to be sold. Some online retailers are predicting that this year will be their busiest year ever as more shoppers buy online. There is also an interesting video showing the inside of Amazon’s distribution centre.

Tags: Amazon, Asos, Expansys, France, Germany, Ireland, PhotoBox, Play, Tax, UK, WEEE

The EU is now officially in recession, and both the EU and the member states’ governments are trying to develop strategies to ensure that the economic downturn is as short as possible.

One of the main driving forces behind any economy is consumer spending, and it is interesting to see how different governments are trying to encourage consumer spending. For example, the British government has decided to reduce VAT from 17.5% to 15% in the beginning of December. Meanwhile, the Irish government has decided to increase VAT from 21% to 21.5% in the beginning of December also! More details can be found in Darling cuts VAT in pre-Budget measures.

Since VAT is calculated at the point of sale for transactions within the EU, these changes will mean that the difference in cost between buying in Ireland and the UK will become 6.5% based on the VAT alone. This is bad news for Irish businesses (and ultimately the government), but it is great for both British businesses and consumers!

I already do a significant amount of my shopping online in other EU member states, and I will try and do even more this Christmas. I am particularly fond of shopping on Spanish websites where the VAT is 16%, and I also purchase online quite regularly on a Luxembourgian website where the VAT is 15%. Now the websites in the UK will be getting more of my business!

If you are curious about the rates of VAT in the different EU member states then take a look at European Union Value Added Tax.

Tags: Ireland, Spain, Tax, UK