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:
Net Revenue  (Rental price paid by Rider excluding cancellations) = 12 GBP
VAT Amount = 20% = 2 GBP
Net Revenue EXV (Rental less VAT) = 10 GBP
Partner Commission (80% Bike Owner income) = 8 GBP
Donkey Republic Commission (20%) = 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:
Net Revenue  (Rental price paid by Rider excluding cancellations) = 10,00 EUR
VAT Amount = 21% = 1,74 EUR
Net Revenue EXV (Rental less VAT) = 8,26 EUR
Local Affiliate Commission Rate (10%)  = 0,83 EUR
Global Affiliate Commission Rate (10%) = 0,83 EUR
Net Revenue EXVAC (Net Revenue excluding VAT & Affiliate Commission) = 6,61 EUR
Partner Commission (80% Bike Owner income) = 5,33 EUR
Donkey Republic Commission (20%) = 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:
Net Revenue  (Rental price paid by Rider excluding cancellations) = 90,00 SEK
VAT Amount = 25% = 18,00 SEK
Net Revenue EXV (Rental less VAT) = 72,00 SEK
Local Affiliate Commission Rate (10%)  = 7,20 SEK 
Global Affiliate Commission Rate (10%) = 7,20 SEK
Net Revenue EXVAC (Net Revenue excluding VAT & Affiliate Commission) = 57,60 SEK
Partner Commission (30% Bike Owner income) = 17,28 SEK
Donkey Republic Commission (20%) = 11,52 SEK
Donkey Finance Commission (50%) = 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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