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

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

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