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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 7/1/2013

Ireland: VAT essentials 

Essential information regarding VAT as it applies in Ireland.


Scope and Rates

What supplies are liable to VAT?


Value-added tax (VAT) is due on any supply of goods or services made in the Republic of Ireland, where it is a taxable supply made by a taxable person in the course or furtherance of a business carried on by that person, other than in the course or furtherance of an exempted business. "Supply” is not restricted to the provision of goods and services by way of sale but can apply equally to other forms of transaction, including the leasing or hire of goods, the grant, assignment, or surrender of a right, or even an agreement not to do something or the toleration of a situation.


A supply within the charge to VAT normally only includes supplies for consideration. However, certain actions carried out for no consideration are deemed to be supplies; for example, certain disposals of goods free of charge and diverting business assets to a private use.


What is the standard rate of VAT?


The standard rate of VAT is currently 23 percent (with effect from 1 January 2012).


Are there any reduced rates, zero rates, or exemptions?


Yes. There is a reduced rate of 13.5 percent for certain goods and services, including:


  • building work
  • veterinary services
  • works of art
  • electricity, solid fuels, heating oil, and gas for heating
  • repair services
  • child car seats
  • non-oral contraceptive products.

From 1 March 2012, the rate of VAT applying to district heating is the reduced rate of 13.5 percent. The reduced rate of 13.5 percent already applies to supplies of electricity, gas and home heating oil.


A second reduced rate of 9 percent was introduced from 1 July 2011 until 31 December 2013 for certain goods and services mainly related to tourism such as the following:


  • restaurant and catering services
  • hotel and holiday accommodation
  • admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions
  • fairgrounds or amusement park services
  • the use of sporting facilities
  • hairdressing services
  • printed matter such as brochures, maps, programs, leaflets, catalogues and newspapers.
  • admissions to open farms and built and natural heritage facilities (with effect from 1 January 2012).

Please note that the Irish Revenue has recently confirmed that the reduced rate of 9 percent also applies to admissions to open farms and built and natural heritage facilities with effect from 1 January 2012. Previously, admissions to these facilities were treated as VAT exempt lettings.


A reduced rate of 4.8 percent also applies to the following supplies:


  • livestock
  • greyhounds
  • At the time of going to print this rate was still in Irish VAT legislation and no amendments had been made to Irish VAT Law following the ECJ decision (C-108/11) in which Ireland lost its case against the Commission’s The CJEU held that the application of this rate was incompatible with Ireland’s obligations under Article 110 of the EU VAT Directive.

Ireland was relying on the “standstill” provisions of Article 110 of the VAT Directive to adopt a VAT rate lower than the minimum 5 percent. Article 110 allows reduced VAT rates lower than 5 percent where (1) the reduced rate is granted for a “clearly defined social reason” and (2) the rate is for the benefit of the final consumer. The Court held that Ireland had not proved that either of these two conditions were met and as a result, Ireland will be required to introduce amendments to VAT legislation. At the time of going to print no such amendments had been announced.


There is also a separate flat rate farmer’s addition/levy available and this was reduced from 5.2% to 4.8% with effect from 1 January 2013.


There is an extensive list of zero rate supplies, including:


  • exports of goods
  • certain food items
  • books
  • medicines and certain medical equipment
  • children's clothing (up to age 10).

The list of exemptions includes:


  • financial services
  • welfare
  • insurance
  • education/training
  • betting (including the services of remote betting intermediaries where the consideration payable for their services consists of commission that is liable to excise duty) and lottery winnings
  • medical services
  • postal services.

Note: it is generally not possible to recover VAT incurred in making VAT exempt supplies unless these come within the definition of “qualifying activities”.


What are the other local indirect taxes beside VAT?


Customs Duty, Excise Duty, Stamp Duty, Carbon Tax, Electricity Tax, Vehicle Registration Tax, Air Travel Tax.

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Registration

Who is required to register for Irish VAT?


Irish Entities


If a business makes taxable supplies in the Republic of Ireland, and the total consideration exceeds the relevant VAT registration threshold it will be required to register and account for Irish VAT. If the total consideration does not exceed the registration threshold it can still choose to register for VAT as a Voluntary Trader.


The VAT registration thresholds (in relation to any continuous period of 12 months) are as follows:


  • supply of services only – EUR 37,500
  • supply of goods liable to VAT at 9 percent, 13.5 percent or 23 percent that have been manufactured or produced from zero-rated materials – EUR 37,500
  • supply of all other goods – EUR 75,000
  • supply of goods and services (if 90 percent of turnover is derived from the supply of goods) – EUR 75,000
  • intra-Community acquisition of goods – EUR 41,000.

Note: the VAT registration threshold applicable to supplies of immovable goods or the receipt of certain services from abroad is zero.


Non-Irish Entities


The registration thresholds that apply above to Irish established entities do not apply to entities who are not established in Ireland but who are making taxable supplies in the Republic of Ireland.


If a business is not registered for VAT in the Republic of Ireland but sells and delivers goods from another European Union (EU) Member State to customers in the Republic of Ireland who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of EUR 35,000 in a calendar year, the business is required to register and account for Irish VAT.


Electronically supplied services: If a business is established outside the EU and supplies electronically supplied services to customers in Ireland who are not in business, then the place of supply is in principle Ireland and the non-EU company will then have to register for Irish VAT. If, however, it supplies the same services to customers in other EU Member States the business can opt to register for VAT in one Member State rather than all of them. In this case the business still has to account for VAT on supplies made at the rate prevailing in the country of the customer but only has to deal with one Member State for filing and payment purposes. Changes are due to come into force with effect from 1 January 2015 which effectively result in the place of supply of such services where supplied to a non-Business customer shifting to the place where the services are consumed.


Are there penalties for not registering or late registration?


Failure to register for VAT promptly may result in a penalty of EUR 4,000. Any unpaid VAT liability in the period may be subject to penalties of up to 100 percent of the tax due together with interest of 0.0274 percent per day with effect from 1 July 2009.


Mitigation of the penalties may be achieved through disclosure to the Irish Revenue and cooperation (see section International Supplies of Goods and Services for more detail on the Irish penalty regime).


Is voluntary VAT registration possible for an overseas company?


Yes, under Irish VAT legislation this is referred to as an election to register. An election to register cannot be back dated. However, to the extent that a non-established trader is engaged in the supply of goods and/or services in Ireland then they have a zero registration threshold and are obliged to register for VAT within 30 days of commencing to trade in Ireland.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


Generally, if a business makes supplies of goods or services in the Republic of Ireland in excess of the VAT registration threshold, then it is required to register and account for Irish VAT. However, it is possible to avoid registering and accounting for Irish VAT when making certain supplies.


In the following examples the obligation to account for the VAT due can be shifted to the customer provided that it is registered for Irish VAT.


Triangulation


If a company is an intermediate supplier to an Irish buyer of goods purchased from a business in another EU Member State and are delivered from there to the Republic of Ireland, VAT due can be accounted for by the Irish customer (see section International Supplies of Goods and Services). Please also see the section on Registration for more detail on triangulation.


Call-Off Stock


Where a company stores stock at its business customer’s premises under their control in certain circumstances the customer can account for VAT on the supply as an acquisition.


Supply and Install


If a business supplies movable goods and installs or self-assembles them in the Republic of Ireland, its customer (if they are an accountable person, public body, etc.) can self-account for any VAT due on the reverse charge basis. The company must not be established in the Republic of Ireland to avail of this relief. The Irish Revenue Commissioner’s view is that the supply and installation simplification does not apply to goods which become fixtures once installed.


Construction type activities that are subject to a withholding tax called Relevant Contracts Tax, are subject to the reverse charge in certain circumstances. Please see the section on special measures applicable to services supplied by sub-contractors within the construction industry.


Gas and electricity


Where a person not established in the state supplies gas or electricity through the national distribution system, to a recipient in the State that is a taxable person who carries on a business in the State or a public body, then that recipient shall be the accountable person.


Reverse Charge Services


These services are covered in more detail in International Supplies of Goods and Services.


Bear in mind that these provisions are subject to particular requirements.


Does an overseas company need to appoint a fiscal representative?


No.

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VAT grouping

Is VAT grouping possible?


Yes, provided certain criteria are met. Primarily the VAT group members must be established in the Republic of Ireland for VAT purposes and must be closely bound by financial, economic and organizational links. In practice the Irish Revenue tends to allow VAT grouping where there is at least a 50 percent common ownership test met.


The Irish Revenue has the discretion to refuse a VAT group registration application for the protection of the revenue, and may compulsory group or de-group members.


Persons engaged in providing taxable or exempt goods and services in the course or furtherance of business and also holding companies can be included in a VAT group. However, at least one member of the VAT group must be in business.


Essentially, the main advantage of VAT grouping is that intra-group supplies can be ignored for VAT purposes (however, this does not apply in the case of certain supplies of immovable property) and only one VAT return has to be submitted. The downside is that all members of the VAT group are jointly and severally liable for each members VAT liabilities, which continues to exist for the period during which they were grouped, even after a member has exited the group.


As you know during the year the CJEU dismissed the Commissions’ case in C-85/11 against Ireland and held that non-taxable persons are not specifically excluded under Article 11 of the EU VAT Directive. The Court held that it is therefore possible to include non-taxable persons in a VAT group. As a result of this decision, similar cases that the Commission has brought against the Czech Republic, Denmark, Finland and the UK with respect to the same issue were dismissed.


Can an overseas company be included in a VAT group?


Yes, provided the company has an establishment in the Republic of Ireland. Generally, an establishment requires human and technical resources to be present.


The VAT group application forms can be accessed on the Irish Revenue's website.

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Returns

How frequently are VAT returns submitted?


Most VAT registered businesses are required to submit VAT returns (form VAT 3) on a bi-monthly basis that is, January/February, etc. However, if a business is in a continuous repayment position because its input tax exceeds its output tax, it may apply to submit monthly VAT returns which will ease its cash flow.


Bi-monthly VAT returns submitted manually must be submitted by the 19th of the month following each two month taxable period such as, 19 March for January/February VAT period. For taxpayers who pay and file VAT returns electronically via the Irish Revenues on-line service (ROS) the deadline for submission of VAT returns has been extended to the 23rd of the month following the bi-monthly VAT period. From 1 June 2012, it is mandatory to both file VAT returns and pay any VAT liabilities on ROS. While other payment methods may be accepted, we are aware that the Irish Revenue has in some cases refused VAT payments not made online and are reminding taxpayers of their mandatory obligations (and associated penalties for failing to comply fully).


The Revenue Commissioners may, on application, exclude a taxpayer from their obligation to pay and file electronically if Revenue is satisfied that the taxpayer does not have the capacity to do so. In this context "capacity" means sufficient access to the internet and, in the case of an individual, also means not prevented by reason of age, or mental or physical infirmity from filing or paying electronically. A taxpayer has a right to appeal a decision not to exclude them to the Appeal Commissioners. In certain cases businesses may apply to submit annual VAT returns, however the Tax Authorities will collect payments periodically by direct debit.


Bi-annual filing of VAT returns is available for taxpayers with annual VAT liabilities of less than EUR 3,000. Traders who have annual VAT liabilities of between EUR 3,000 and EUR 14,400 may be able to file on a tri-annual basis.


An Annual Return of Trading Details (ARTD) is also required to be completed annually. This is a statistical return which records the VAT exclusive values and VAT rates applicable to sales, purchases, importations, reverse charge supplies, and intra-community acquisitions/supplies throughout the year. It is generally due for filing following the taxable person's financial year-end.


Failure to furnish VAT returns and settle any outstanding payments on time may result in a penalty of EUR 4,000 plus up to 100 percent of the tax due and interest at the rate of 0.0274 percent per day that the tax is due but not paid.


Cash/Money Receipts Basis of Accounting


In order to qualify, a taxable persons total turnover must not derive at least 90 percent of supplies to non-VAT registered persons or persons with restricted VAT recovery entitlement or the value of his/her total annual turnover must be less than EUR 1.25 million.


In addition, the cash receipts basis of accounting does not apply if the supplies are to connected parties.


Are there any other returns that need to be submitted?


VIES (otherwise known as European Sales List (ESL))


If a business supplies goods or services which are shipped from the Republic of Ireland to VAT registered businesses in other EU Member States and the supply is either zero-rated or outside the scope (see section International Supplies of Goods and Services) but subject to VAT in the country of receipt, then it is required to complete a VIES return.


The VAT Package Directive, introduced on 1 January 2010 provides that, as a general rule, traders must submit VIES returns on a monthly basis. However in the case of supplies of services, taxable persons may submit VIES Statements on a calendar quarterly basis without any threshold limit. Traders whose supplies of goods exceed the threshold of €50,000 in any of the previous four quarters will be obliged to submit monthly VIES returns rather than quarterly (this threshold was previously €100,000 up to 31 December 2011). VIES must be filed by the 23rd day of the month following the relevant period.


Failure to submit VIES on time may result in a penalty of EUR 4,000.


Intrastat Supplementary Declarations


Every VAT registered trader must complete boxes E1 and E2 of the VAT 3 return which details the value of goods received from or dispatched to other EU Member States during the taxable period. There is no threshold. Several items will be excluded that would appear on the more detailed Intrastat return.


VAT registered businesses with a value of dispatches or arrivals of goods to or from other EU Member States, which exceed a certain threshold (EUR 191,000 for arrivals and EUR 635,000 for dispatches per annum) must complete supplementary (detailed) declarations each month. The time limit for submission of the detailed Intrastat is not later than the 10th working day immediately following the end of the month to which the return relates.


The failure to submit Intrastat declarations on time may result in a fine of EUR 1,265. In addition, where there is continuous non-compliance, penalties of EUR 60 for each day that the non-compliance continues may be incurred.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


The exchange rate that should be used is the latest selling rate to be recorded by the Irish Central Bank for the non-Euro currency in question at the time the tax becomes due. An alternative method may be used in determining the exchange rate if there is advance agreement with the Revenue Commissioners, provided that the agreed method is used consistently for foreign currency transactions.

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VAT recovery

Can a business recover VAT if it is not registered?


Yes. If a company is established in another EU Member State and not established or required to be VAT registered in Ireland then it should make a claim under what is known as the Electronic VAT Refund (EVR) (Directive 2008/9/EEC of 12 February 2008) procedure. Non-EU businesses should recover VAT under the EU 13th Directive.


Time Limits


Irish VAT legislation requires that Electronic VAT Refund reclaims are made before 30 September of the year following the calendar year to which the claim relates and Thirteenth Directive reclaims are made before 30 June of the year following the calendar year to which the claim relates. For Irish VAT registered traders, any claims for a refund of VAT must be made within a four-year time period from the date in which the VAT in question was incurred.


The Electronic VAT Refund (or EVR) application will have to be made by Irish traders directly to the Irish Revenue Authorities through ROS, the Revenue On-line Service, under the new tax head “EVR”. Access the 13th Directive claim form on the Irish Revenue (PDF 550 KB) website.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


Ireland has full reciprocity with all countries and in general will allow 13th Directive repayments once they meet all the necessary requirements.


Are there any items that businesses cannot recover VAT on?


Yes. There are certain items that businesses cannot recover VAT on. For example:


  • exempt supplies
  • non-business (including private) activities
  • purchase or hire of motor cars - please note that it is possible to recover 20 percent of input VAT incurred on the purchase/ hire/intra-Community acquisition or importation of a qualifying vehicle (defined as a motor vehicle which is first registered for Irish vehicle registration tax on/ after 1 January 2009 and has for the purposes of that registration a level of CO2 emissions of less than 156g/km) that is used primarily for business purposes (that is, at least 60 percent)
  • any business entertainment: VAT is not generally recoverable on business entertainment costs
  • accommodation except certain qualifying hotel conference accommodation (conditions include 50 or more delegates and that the conference is in the course or furtherance of business)
  • food and drink
  • fuel (but diesel may be reclaimed)
  • employee personal services
  • goods sold under one of the margin schemes for second hand goods. There are a number of schemes which provide for VAT to be accounted for on the goods' sales margin, but do not allow VAT recovery on the purchase of those goods. Please note that since 1 January 2010 Ireland has had a Travel Agents Margin Scheme and a VAT margin scheme for sales of second-hand means of transport. The Finance Act 2012 removed a provision whereby a travel agent supplying margin scheme services that includes qualifying accommodation in connection with attendance at a qualifying conference (see above) could issue to the business delegate, for deductibility purposes, a document setting out the VAT element of the cost of that qualifying accommodation. It is the Irish Revenue’s view that this document was rarely used and that this provision was inconsistent with the VAT Directive, hence the change.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


If a company sells goods to a customer who is registered for VAT in another EU Member State and the sale involves the removal (that is transport/ dispatch) of those goods from the Republic of Ireland (either by the supplier or its customer) to that Member State, then it does not need to charge VAT and may zero rate the supply as an intra-EU dispatch. It must obtain the customer's VAT registration number in advance of or at the time of the supply & quote it on the face of the invoice as well as indicating that the customer may be liable to local tax.


This customer’s VAT number, sales invoice and documentary evidence that the goods have been removed from the Republic of Ireland should be retained. The goods must also be dispatched within a period of 3 months from the date the supply took place.


If a company sells goods to a customer who is not registered for VAT in another EU Member State, and any of the above conditions are not met, it will have to charge Irish VAT. If its sales to non-VAT registered customers in another Member State exceed a certain threshold, it may have to register and account for VAT in the respective Member State (that is Distance Selling).


If a company exports goods to a customer (business or private) outside of the EU, then it does not need to charge VAT; but, as with intra-Community sales, it should make sure that in all cases to keep proof of dispatch/delivery to support the zero rating.


Services


Since the introduction of the VAT Package on 1 January 2010 there are two general place of supply rules for services, depending on whether the recipient is in business or a private consumer:


  • for supplies of Business to Business (B2B) services, the place of taxation is the place where the recipient (i.e. customer) is established subject to certain exceptions
  • for supplies of Business to Consumer (B2C) services, the place of taxation is where the supplier is established subject to certain exceptions.

Although there are certain exceptions, in most cases, if a company supplies services to a business (that is VAT registered) customer in another EU Member State or a customer (business or private) outside of the EU, then it does not have to charge Irish VAT on its supply.

It is essential that in respect of supplies to EU business customers, the customer's EU VAT registration number and a reference that the reverse charge may apply is included on the face of the invoice.


As an exception to the general place of supply rule, the following services are treated as being supplied for VAT purposes where physically performed:


  • admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events (applies to business and non-business customers)
  • restaurant and catering services (applies to both business and non-business customers)
  • certain transport services
  • ancillary transport activities such as loading, handling, and similar activities (if B2B then reverse chargeable)
  • the valuation of movable tangible property (if B2B then reverse chargeable)
  • work on movable tangible property (subject to some exceptions) (if B2B then reverse chargeable).

Other exceptions to the general place of supply rules are:


  • restaurant and catering services for consumption on board ships, planes and trains - place of supply is place of departure
  • for short-term hiring out of means of transport the place of supply is where the transport is put at the disposal of the customer. For long-term hiring-out of means of transport, the place of supply follows the general rules
  • passenger Transport services (B2B and B2C) - place of supply is where the passenger transport takes place
  • supply of services connected with immovable goods - place of supply is where goods are located.

How are goods dealt with on importation?


When goods are imported into the Republic of Ireland from outside the EU, import VAT and customs duty may be due. This generally has to be paid or secured before the goods will be released from customs' control.


A duty deferment scheme is however available to certain traders subject to the provision of a bank guarantee and compliance with certain conditions. Under the provisions of this scheme the trader may defer payment of customs and import duties until the 15th day of the month in which the VAT becomes due, allowing the goods to be released from customs' control and thereby providing a cash-flow advantage to the trader.


How are services which are brought in from abroad treated for VAT purposes?


If a company buys in certain services from outside the Republic of Ireland, it may be required to apply the reverse charge. This is intended to take away any VAT advantage of buying those services from outside the Republic of Ireland where a lower rate of VAT or perhaps no VAT applies.


Under the reverse charge a company is required to account for a notional amount of Irish VAT as output tax in its Irish VAT return covering the period in which it received the service/invoice or made the payment (whichever is earlier) and it recovers this VAT as input tax on the same return assuming it is entitled to full VAT recovery.


If a business is able to recover all of its VAT, the reverse charge has no cost effect and is a VAT compliance matter only. However, if it is partly exempt there is likely to be a VAT cost depending on the level of VAT recovery it is entitled to.


No requirement to reverse-charge will arise if the services received qualify for Irish VAT exemption (such as certain banking, financial, and insurance services).


While the following services are treated as supplied where physically performed they are subject to the reverse charge mechanism where the supplier is not established in Ireland but the customer is established in Ireland:


  • the provision of services connected with immovable goods to an Irish customer by a service provider outside Ireland where the service is carried out in Ireland (exceptions include the supply of expert services or estate agents, the provision of hotel or holiday accommodation and preparation and co-ordination of construction). Intra-Community transport of goods (B2B). Please note that for intra-Community transport of goods B2C the place of supply is still the place of departure
  • certain ancillary transport activities such as loading, handling and similar activities (where the customer is registered for VAT in Ireland i.e. B2B).

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Invoices

Is a business required to issue tax invoices?


An accountable person (that is, a person registered for Irish VAT) who supplies goods or services is obliged to issue a VAT invoice where the supply is made to any of the following:


  • another accountable person
  • a public body
  • a person who carries on an activity which is exempt from VAT
  • a person, who is not an individual, in another EU Member State (in circumstances where Irish VAT at any rate is charged)
  • a person in another EU Member State where a reverse charge applies, that is, where the VAT is not accountable for by the supplier in Ireland but is accountable for by the customer in the other EU Member State and
  • a person in another EU Member State under the “distance selling rules” for supplies of goods. Distance selling occurs when a supplier in one EU Member State sells goods to a person in another EU Member State who is not registered for VAT and the supplier is responsible for the delivery of the goods to the other Member State. It includes mail order sales and phone or tele-sales but does not include sales of new means of transport or excisable goods.

Revenue guidance indicates that an accountable person should, if requested in writing, issue a VAT invoice in respect of a transaction with an unregistered person in the State who does not fall within the above categories, but who is entitled to a repayment of the VAT. An accountable person is not required to issue a VAT invoice to an unregistered person otherwise, but may do so if he or she so wishes.


What do businesses have to show on a tax invoice?


A tax invoice should contain the following data:


  • date of issue,
  • a sequential invoice number. If the invoice adjusts an earlier invoice (such as, a credit note), reference should be made to the original invoice. This number should uniquely identify the invoice,
  • supplier name and address and VAT registration number,
  • customer name and address,
  • in the case of a reverse charge (excluding a supply of construction services subject to Relevant Contracts Tax) supply, the VAT identification number of the person to whom the supply was made and an indication that a reverse charge applies,
  • In the case of a supply of goods, other than reverse charge supply, to a person registered for VAT in another Member State, the persons VAT identification number in that Member State and an indication that the invoice relates to an Intra-Community supply of goods,
  • the quantity and nature of the goods/services supplied,
  • tax point (date of taxable supply) - if an advance payment is received prior to the date the invoice is issued then the date of the advance payment must be shown
  • in respect of the goods / services supplied, the unit price (exclusive of any VAT), any discounts or price reductions not included in the unit price and the consideration exclusive of VATin respect of goods/services supplied, other than reverse charge supplies, the consideration exclusive of tax for each rate (including the zero-rate) of VAT and the VAT rate applicable
  • the amount of VAT payable in EUR in respect of the supply of the goods/services, except in the case of a reverse charge supply or goods supplied under the margin scheme for second-hand goods or under the special scheme for auctioneers.
  • where an invoice relates to either auction scheme or margin scheme goods, the invoice must be clearly endorsed with the following “margin scheme – auction goods/works of art/collector’s items and antiques/second-hand goods” depending on the particular type of goods and also state that “this invoice does not give a right to an input credit of VAT”.
  • If the supply falls under the self-billing rules then the invoice must be endorsed with “self-billing”.
  • invoices are not required to be issued for exempt supplies, but invoices are required to be issued for zero-rated supplies such as those issued to a customer with a VAT 56 authorization(see below).
  • The VAT 13A (now called Section 56 authorization) provides that where a VAT registered trader derives 75 percent or more of his/her annual income from certain zero-rated supplies of goods from Ireland to overseas customers such as goods sold and dispatched to customers outside the EU, to VAT registered persons in other EU Member States etc. the trader can apply to the Irish Revenue Commissioners to have most goods and services supplied to him/her from Irish suppliers at the zero-percent VAT rate. The relief does not apply to items on which input VAT recovery is not allowed (such as, food, drink, entertainment, purchase or hire of cars other than stock-in trade). The main benefit of this authorization is a cash flow benefit.

The VAT 13A (now called Section 56 authorization) provides that where a VAT registered trader derives 75 percent or more of his/her annual income from certain zero-rated supplies of goods from Ireland to overseas customers such as goods sold and dispatched to customers outside the EU, to VAT registered persons in other EU Member States etc. the trader can apply to the Irish Revenue Commissioners to have most goods and services supplied to him/her from Irish suppliers at the zero-percent VAT rate. The relief does not apply to items on which input VAT recovery is not allowed (such as, food, drink, entertainment, purchase or hire of cars other than stock-in trade). The main benefit of this authorization is a cash flow benefit.


Once a trader has received an authorization certificate from the Irish Revenue Commissioners, the trader should send a copy of the authorization certificate to each of its suppliers. This permits the suppliers to zero-rate their supply of goods and services to the authorized trader. The VAT authorization number should be quoted on all invoices issued by the supplier to their authorized customers.


The authorization remains valid for a period of between one and three years. A new application can be made to the Irish Revenue Commissioners at the expiration date. Should a trader cease to meet the requirements for authorization, the trader is obliged to notify the Irish Revenue Commissioners. Authorized traders can also avail of this zero rating provision on imports from outside the EU and intra-Community Acquisitions.


Please note if an authorized person ceases to be a qualifying person they shall be liable to a penalty of €4,000 in the period that they cease to qualify and a penalty of €4,000 for every subsequent VAT return period that they cease to qualify, if they fail to notify Revenue on time.


Can businesses issue invoices electronically?


Yes, it is possible to operate an electronic invoicing system. The new legislation with effect from the 1st January 2013 simplifies, modernises and harmonises the VAT invoicing rules and in particular eliminates the current barriers to e-invoicing. Paper and electronic invoices shall be treated in a similar way for the purposes of VAT. The new rules should increase the use of electronic invoicing which in effect should reduce burdens on business, support small and medium sized enterprises and provide more flexibility for business in the use of electronic invoicing.


Is it possible to operate self-billing?


Yes, provided that the supplier has an agreement with its VAT registered customer before doing so.


Can a business issue VAT invoices denominated in a foreign currency?


VAT invoices can be issued in a foreign (non Euro denominated) currency, however the VAT amount (if any) stated on the invoice should also contain the corresponding figure in Euro.

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes, relief from Irish VAT is available when a person transfers a business or part of a business to a VAT registered purchaser.


There is no requirement under Irish VAT law that the transferee intends to pursue, before the transfer, the same type of economic activity as the transferor nor that the transfer must constitute a transfer of the business as a going concern (that is, the trade may have ceased).

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Options to Tax

Are there any options to tax transactions?


Yes, it is possible to opt to tax certain types of transactions involving immovable property.


In addition, suppliers of investment gold and their intermediaries may choose to opt to tax certain transactions.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


Transactions between head office and branch are generally ignored. If there are transactions between head office/branch in a VAT grouping context, the position is more complex and advice should be taken in respect of such transactions. The Irish Revenue Authorities accept the provisions outlined in the FCE Bank decision (case C-210/04).

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Bad Debt

Are businesses able to claim relief for bad debts?


Yes, businesses are able to claim VAT back on the unpaid element through their VAT return. If they subsequently receive payment for the supply then they will have to pay back the VAT element to the Revenue in the same way.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


Yes, there are general anti-avoidance provisions which apply to all taxes including VAT. These provisions are very wide ranging and complex and specific advice should be taken in all cases. The provisions provide that where a transaction is undertaken for the sole purpose of tax avoidance then the Irish Revenue Commissioners may set the transaction aside and impose an appropriate charge to tax on the taxpayer. In addition, Finance Act 2010 introduced a mandatory reporting requirement in respect of certain transactions which may give rise to a tax advantage. The reporting requirement rests primarily with tax advisers and banking institutions.

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Penalty Regime

What is the penalty and interest regime like?


Penalties can consist of either fixed fines or tax-geared penalties or both. Penalties are recoverable by way of civil proceedings and in certain circumstances penalties will be prosecuted through the criminal courts. Interest will normally be applied to any underpayment of tax.


Mitigation of penalties may be available in certain circumstances - see below for further details.

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Tax authorities

Tax audits


How often do tax audits take place?


There is no set timeline for how often the Irish Revenue conducts VAT audits. The Irish Revenue generally selects cases for audit based on the presence of various risk indicators and also on a random selection basis.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


Yes, e-audits are carried out in Ireland. Revenue generally use the software system IDEA in carrying out their e-audits. However Revenue may use other methods.


E-Audits may involve an examination of the electronic systems used in the course of the business and the electronic copying and downloading of electronic data for analysis. This does not change the nature of an audit, it merely allows the Revenue auditor to use computer-assisted audit techniques on taxpayer's data. Generally, Revenue auditors will request the taxpayer to provide reports and data files of a specific nature in electronic format.


All digital information extracted is then stored on encrypted storage devices in accordance with safeguards outlined in Revenue’s data security policy and ICT guidelines. In this way, confidential taxpayer data is protected.


As outlined above, Revenue auditors use a variety of electronic support tools and techniques, however, audit notification letters will generally advise the taxpayer if it is intended to use extensive e-auditing techniques. Some standard electronic checks are part of most audits and these do not require advance notification in the same way.


The taxpayer is expected to fully co-operate with the Revenue auditor. This includes providing reasonable assistance in obtaining or retrieving information or data stored electronically.


Advance rulings and decisions from the tax authority



Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


Yes it is possible to write to Revenue and request a ruling from them where the VAT treatment of a transaction is in doubt, however it is specific to the taxpayer. The Irish Revenue normally will not provide a general ruling on a no names basis. In addition, it is possible to seek determinations from Revenue.


Are rulings and decisions issued by the tax authorities publicly available in your country?


Where a taxpayer has made an application to Revenue, this is not published although certain historic Revenue precedents are publicly available. Where Revenue voluntarily makes a determination (i.e. without an application from a taxpayer) regarding the VAT rating treatment of or application of VAT exemption to an activity, the determination is published.

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


The following derogations have been obtained in accordance with Article 395 of Directive 2006/112/EC as at 31 December 2011:


  1. Exemption for fish supplied by certain fishermen to taxable persons.
  2. Treatment of supplies of food products as supplies of services, resulting in the application of the reduced rate instead of the zero rate.
  3. Simplification of the VAT arrangements applied to retailers.
  4. Application of an increased VAT rate under certain circumstances e.g. where goods are made up by a contractor from materials supplied by the customer.
  5. Refund of tax to foreign taxable persons e.g. allowing an Irish supplier who supplies certain services on a continuous basis to a taxable person not established in Ireland to supply those services to that foreign trader with zero rated VAT.
  6. Refund to non registered farmers of the VAT charge on certain buildings and the drainage or clearing of land.
  7. Application of zero-rating to fertilizers, animal feeding stuffs and seeds.
  8. Application of the zero and reduced rates to certain supplies of livestock and property.

In addition, the Irish VAT on property system differs in various respects from other EU Member States.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


There are two reduced VAT rates in Ireland (see Section on Scope and Rates).

 

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