LETS Trade and Tax
If an exchange is not commercial, there will be no tax liability.
If an exchange is clearly commercial in nature, then tax will be liable.
Tax liabilities need to be paid in Euro.
- Favours for friends
Most of the LETS trades will be non-regular activities of different kinds, or occasional neighbourly services. The total personal turnover is usually small, well below any tax thresholds.
- Regular commercial services of sole traders/self-employed people (according to their normal trade or profession) may be liable for tax on profits. Any profits made should be declared in LETS units (after deducting business expenses and personal allowance) in their usual tax returns. It will help if a cash value is assigned to the LETS units (like 1 Euro per 1 LETS), otherwise the Revenue may apply an estimate themselves by using commercial market rates.
- Exchanges where people are offering something which is not connected with their normal business, but which is offered and supplied regularly so as to amount to a business in itself, is therefore also commercial and tax liable.
- A business should record LETS credits by keeping an extra column in their accounts for it. Business expenses paid through LETS are tax deductible, as can Charitable Gifts in LETS units be tax exempt.
- LETS trade is unlikely liable for tax, if a professional person is not using it for transactions connected with their normal trade or business but for other occasional reasons.
- For clarity of tax assessment businesses are advised to open two separate LETS accounts, one for business income and outgoings, one for personal (non-business) use.
- Tax liabilities and returns
East Clare LETS cannot be aware of, or responsible, for individual members’ tax positions. All declarations must remain the personal responsibility of each member concerned.
A.B. web design