How is VAT handled on Bike Rentals?

This is a description on how VAT is handled on bike rentals via Donkey Republic's platform with effect from 01.01.2017. 

The short-term rental of a bicycle is classified as a taxable transaction and carries a requirement that local VAT (in the country of rental) is charged towards the Rider. The bike rental is a transaction between the Bike Owner and the Rider.

Donkey Republic will charge the Rider rental + local VAT on the rental and the rental + VAT will be transferred to the Bike Owner less Donkey Republic's and other Partners commission (calculated after deduction of VAT). The Bike Owner is responsible for VAT repayment towards the local government.
 
Commission to Local and Global Affiliates is calculated on the Net Rental Income.
Commission to Bike Owner, Donkey Republic and Donkey Finance is calculated on the Net Rental Income less paid (if any) Affiliate commissions. Affiliate commissions will vary between 5-15%. Donkey Republic will agree with Bike Owners before larger commissions are promised to Affiliates.
 
Example VAT calculations: 
 
 
Example 1: Rental in UK. Parties = Rider + Bike Owner + Donkey Republic:
Gross Rental income (rental price paid by Rider) = 12 GBP
VAT = 20% = 2 GBP
Net Rental Income (rental less VAT) = 10 GBP
80% Bike Owner income = 8 GBP
20% Donkey Republic commission = 2 GBP
Total to be received by Bike Owner = 2 + 8 GBP = 10 GBP
 
 
Example 2: Rental in Spain. Parties = Rider + Bike Owner + Local Affiliate + Global Affiliate + Donkey Republic:
Gross Rental income (rental price paid by Rider) = 10,00 EUR
VAT = 21% = 1,74 EUR
Net Rental Income (rental less VAT) = 8,26 EUR
10% Local Affiliate fee = 0,83 EUR
10% Global Affiliate fee = 0,83 EUR
Balance = 6,61 EUR
80% Bike Owner income = 5,33 EUR
20% Donkey Republic commission = 1,32 EUR
Total to be received by Bike Owner = 1,74 + 5,29 = 7,02 EUR
 
 
Example 3: Rental in Sweden. Parties = Rider + Bike Owner + Local Affiliate + Global Affiliate +Donkey Republic + Donkey Finance:
Gross Rental income (rental price paid by Rider) = 90,00 SEK
VAT = 25% = 18,00 SEK
Net Rental Income (rental less VAT) = 72,00 SEK
10% Local Affiliate fee = 7,20 SEK 
10% Global Affiliate fee = 7,20 SEK
Balance = 57,60 SEK
30% Bike Owner income = 17,28 SEK
20% Donkey Republic commission = 11,52 SEK
50% Donkey Finance commission = 28,80 SEK
Total to be received by Bike Owner = 17,28 + 18,00 = 35,28 SEK
 
 
Download Excel-sheet with details on VAT management:
 
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