VAT, GST and Sales Tax in Ireland

Summary

Name of the tax Value-added tax (VAT)
Date introduced 1-Nov-72
European Union (EU) Member State Yes
Administered by The Revenue Commissioners (http://www.revenue.ie)
VAT rates
Standard 23%
Reduced 9% and 13.5%
Other Zero-rated and exempt
VAT number format IE 1234567 A
VAT return periods Bimonthly (standard), triennially, biannually and annually, and Annual Return of Trading Details for all businesses
Thresholds Registration
For persons supplying services EUR37,500
For persons supplying goods EUR75,000
Non-established businesses None
Distance selling EUR35,000
Intra-Community acquisitions EUR41,000
Recovery of VAT by non-established businesses Yes

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods or services made in Ireland by a taxable person
  • The intra-Community acquisition of goods from another EU Member State by an accountable person
  • Reverse-charge services received by a taxable person in Ireland
  • The importation of goods from outside the EU, regardless of the status of the importer

Who is liable

The term “accountable person” refers to any individual or entity that is or should be registered for VAT. A liability to register arises from making “taxable supplies,” which include the supply of goods or services, intra-Community acquisitions and distance sales made in the course of a business in Ireland. An entity that exclusively makes exempt supplies is generally not treated as an accountable person.

The VAT registration thresholds in Ireland depend on the type of supplies made. For an Irish resident business or a fixed establish­ment of a foreign business, the following are the thresholds:

  • EUR37,500 for persons supplying services
  • EUR75,000 for persons supplying goods
  • EUR35,000 for persons making mail order or distance sales into Ireland
  • EUR41,000 for persons making intra-Community acquisitions

A business is required to register for VAT as soon as its turnover is likely to exceed the relevant threshold.

Option for registration. A business established in Ireland that generates turnover not exceeding the registration threshold is not required to register for VAT. However, a business that makes tax­able supplies may opt to register in these circumstances.

Similarly, a new business may request registration in advance of making taxable supplies as soon as it is clear that it will become an accountable person.

Group registration. The Revenue Commissioners may grant group registration status to companies established in Ireland that are closely bound by “financial, economic and organizational links.”

A VAT group is treated as a single taxable person. VAT is not charged on supplies between group members, with the exception of certain supplies of real estate. Group members are jointly and severally liable for all VAT liabilities.

Non-established businesses. A “non-established business” is a business that has no fixed establishment in Ireland. A “nil” VAT registration threshold applies to supplies made in Ireland by a non-established business. VAT registration is required if a non-established business makes any of the following supplies:

  • Goods located in Ireland at the time of supply
  • Supplies of certain services deemed for VAT purposes to have taken place in Ireland (that is, services connected with immov­able property)
  • Intra-Community acquisitions in excess of the annual threshold or acquisitions of services from non-Irish suppliers
  • Distance sales in excess of the annual threshold (see the chapter on the EU)

Registration is not required if all of the supplies made by the non-established business are subject to the reverse charge (self-assessment for tax by the recipient of the supply). The reverse charge does not apply to supplies of goods or services made to private persons.

A non-established business may apply to register for VAT in Ireland at the following address:

Office of the Revenue Commissioners Dublin City Centre/North City Revenue District 9/10 Upper O’Connell Street Dublin 1

Ireland

The Irish VAT authorities may require a non-established business to provide security in order to register for VAT.

Tax representatives. A non-established business is not required to appoint a tax representative in order to register for VAT in Ireland.

Registration procedures. Taxpayers apply for VAT registration through forms TR2 (companies) or TR2 (FT) (branches). Hard copies of these forms have to be sent to the Irish tax authorities. Obtaining VAT registration typically will take two to three weeks.

Late-registration penalties. A penalty of EUR4,000 can be assessed for a failure to register for VAT.

Reverse charge. Not applicable.

Digital economy. The place of supply of telecommunications, broadcasting and e-services to nontaxable persons is the place where the customer is established, has a permanent address or usually resides. Taxable persons that make such supplies are generally obliged to register, charge and account for VAT in the Member State of the customer (see section below describing the Mini One-Stop Shop scheme).

Mini One-Stop Shop. In simple terms, the business registers for MOSS in one Member State, known as the Member State of identification, and electronically submits quarterly MOSS returns in respect of its supplies of telecommunications, broadcasting and e-services to nontaxable persons in Member States in which it is not established, known as the Member States of consump­tion, along with the VAT due to these Member States. These returns, along with the VAT paid, are then transmitted by the Member State of identification to the corresponding Member State(s) of consumption via a secure network.

There are two schemes within the Mini One-Stop Shop scheme:

  • The non-Union scheme for taxable persons that have no estab­lishment within the EU
  • The Union scheme for taxable persons that have an establish­ment within the EU but are making supplies to Member States in which they are not established

If the taxpayer is already registered in Ireland for the current VAT on e-services scheme (VOES), registration for MOSS is unneces­sary: the taxpayer’s information is migrated to the new MOSS scheme. If further details are needed for the purposes of the MOSS, the Department of Revenue will contact the taxpayer directly. The registration number for MOSS is the same as the VOES number.

To register for the non-Union scheme in Ireland, it is necessary to log on to www.revenue.ie or Revenue On-line Service (ROS) and access the VAT MOSS link. Some basic identification infor­mation such as company name, trading name, address, website URLs, contact persons, national tax reference number and bank details should be provided. It will also be required to confirm that the person is not VAT-registered or registered for MOSS in any other Member State and has no establishment in the EU. Once this information has been provided, the next step is to create a verification code that will be needed later to retrieve the VAT MOSS Tax Registration Number and Digital Certificate.

To register for the Union scheme in Ireland, it is necessary to log on to ROS, enter the Manage Registrations page, select VAT MOSS and select Register. As Revenue will already have basic facts about the person in question, the application will be pre-populated with this information. It is possible to edit certain ele­ments of that information for the purposes of MOSS registration. It will also be required to provide details of any fixed establish­ments the person has in other Member States and their VAT identification numbers in those other Member States. The VAT MOSS registration number will be the same as the VAT number of the person.

Deregistration. An accountable person that ceases to be eligible for VAT registration must cancel its registration. An accountable person may also request cancellation of its registration if the level of its taxable turnover falls below the annual registration thresh­old, or if the accountable person previously opted for registration and no longer wishes to be registered.

VAT rates

The term “taxable supplies” refers to supplies of goods and ser­vices that are liable for VAT at any rate, including supplies made at the zero rate. In Ireland, the following VAT rates apply:

  • Standard rate of 23%
  • Reduced rates 9% and 13.5%
  • Zero rate (0%)

The standard rate of VAT applies to all supplies of goods or ser­vices, unless a specific provision allows a reduced rate, the zero rate or exemption.

Examples of goods and services taxable at 0%

  • Books
  • Most foodstuffs (excluding confectionery)
  • Oral medicine
  • Exports
  • Children’s clothing and footwear
  • Goods and services supplied to frequent exporters under the “VAT 56 Scheme” (see Section F)

Examples of goods and services taxable at 9%

  • Newspapers and magazines
  • Holiday accommodation
  • Restaurant and catering services

Examples of goods and services taxable at 13.5%

  • Electricity
  • Repair, cleaning and maintenance services
  • Developed immovable property
  • Building services

The term “exempt supplies” refers to supplies of goods and ser­vices that are not liable for tax. Exempt supplies do not give rise to a right of input tax deduction (see Section F). However, an exception applies to certain exempt services supplied outside the EU.

Examples of exempt supplies of goods and services

  • Postal services
  • Finance
  • Insurance
  • Leasing of immovable property (unless option to tax exercised by landlord)

Option to tax for exempt supplies. A landlord can generally opt to tax a letting (with certain exceptions such as residential property and lettings to connected parties with less than 90% VAT recov­ery).

A vendor of immovable goods and the purchaser of those immov­able goods can jointly agree to tax the sales.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The following is a general summary of the rules for determining when VAT is due:

  • For supplies made to nontaxable persons, the due date is the date on which the supply is completed.
  • For supplies made to taxable persons, the due date is the date on which the invoice is issued or the date on which the invoice should have been issued, whichever is earlier.

Prepayments. A prepayment is deemed to be a taxable supply, up to the value of the prepayment. The invoice for a prepayment must be issued within 15 days after the end of the month in which the prepayment is received.

A supplier that accounts for VAT on the invoice basis must account for VAT on a prepayment from a VAT-registered cus­tomer when the invoice is issued or when it should have been issued (that is, within 15 days after the end of the month in which the prepayment is received), whichever is earlier.

A supplier that accounts for VAT on the cash receipts basis must account for VAT on a prepayment from a VAT-registered cus­tomer when the payment is received.

The due date for a prepayment received from a nontaxable person is when the payment is received.

Intra-Community acquisitions of goods. The due date for intra­Community acquisitions of goods is the 15th day of the month following the month in which the goods arrive or the month in which the invoice is received, whichever is earlier.

Imported goods. The due date for imported goods is the date of importation or the date on which the goods leave a duty suspen­sion regime.

Cash accounting. Some accountable persons are authorized to account for VAT on the basis of payments received rather than on the basis of invoices issued. This system is called “cash account­ing.” Effective 1 May 2014, the turnover threshold for cash accounting is EUR2 million. For accountable persons using cash accounting, the liability to account for VAT arises on the date when payment is received for the supply. However, this does not change the basic tax point for the supply itself. The VAT rate applicable to a supply of goods or services is the rate in force on the date of the supply, not the rate in force on the date when pay­ment is received.

Reverse-charge services. The time of supply is either the date the service performed is completed or the date of the tax invoice, whichever is earlier.

Continuous supplies of services. The time of supply for continu­ously supplied services is the date of the tax invoice.

Intra-Community supplies of goods. The time of supply for intra­Community supplies of goods is either the date of shipment/ delivery or the date of the tax invoice, whichever is earlier.

Leased assets. Not applicable.

Recovery of VAT by accountable persons

An accountable person may recover input tax, which is VAT charged on goods and services supplied to it for business pur­poses. An accountable person generally recovers input tax by deducting it from output tax, which is VAT charged on supplies made.

Input tax includes VAT charged on goods and services supplied within Ireland, VAT paid on imports of goods and VAT that is self-assessed on the intra-Community acquisition of goods and reverse-charge services.

A valid tax invoice or customs document must generally accom­pany a claim for input tax.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not made for business purposes, such as goods acquired for private use. If expenditure relates to business and private use, the input tax must be appor­tioned, and the amount related to business activities may be deducted.

In addition, input tax may not be deducted for some items of business expenditure, including the following items:

  • The provision of food, drink and accommodation except for accommodation incurred in connection with attendance at a qualifying conference. A qualifying conference is a conference undertaken in the course or furtherance of business, organized to cater to 50 or more delegates. VAT may be claimed for a maximum period beginning with the night before the confer­ence and ending on the date when the conference ends.
  • Other personal services for taxable persons or their agents or employees.
  • Entertainment expenses incurred by the taxable persons or their agents or employees.
  • The purchase, hire or importation of passenger motor vehicles. However, 20% of VAT is recoverable on the purchase, hire, or importation of certain cars that have a low level of carbon diox­ide emissions and that are used primarily for business purposes.
  • The purchase of petrol (gasoline). However, diesel is deductible.

The following lists provide some examples of items of expendi­ture for which input tax is not deductible and examples of items for which input tax is deductible.

Examples of items for which input tax is nondeductible

  • Hotel accommodation
  • Food and drink
  • Lease, purchase and hire of most passenger cars
  • Petrol
  • Business entertainment

Examples of items for which input tax is deductible
(if related to a taxable business use)

  • Car maintenance costs
  • Attendance at qualifying conferences and seminars
  • Lease, purchase, hire and maintenance of vans and trucks
  • Diesel for business use
  • Business use of mobile telephones
  • Parking
  • Gas and electricity

Partial exemption. Input tax directly related to making exempt supplies is not generally recoverable. However, input tax related to making certain exempt supplies to non-EU customers (qualify­ing activities) is deductible. If an accountable person makes both exempt supplies and taxable supplies, it may not recover all the input tax incurred on goods or services acquired for both pur­poses. This situation is referred to as “partial exemption.”

Input tax that directly relates to making exempt supplies is not recoverable. Input tax that directly relates to making taxable sup­plies is recoverable in full. For these purposes, the term “taxable supplies” includes zero-rated supplies and qualifying activities. Input tax that relates to taxable supplies and to exempt supplies is considered to have a dual use, and must be apportioned between taxable supplies and exempt supplies. The percentage of dual-use input tax that is attributable to making taxable supplies is recov­erable. The recoverable percentage is rounded up to the nearest whole number. For example, a recovery percentage of 79.2% would be rounded up to 80%.

An Irish accountable person may use any calculation method to determine the recoverable percentage of dual-use input tax if the chosen method satisfies the following conditions:

  • It results in a proportion of tax deductible that correctly reflects the extent to which dual-use inputs are used for the purposes of the person’s deductible supplies or activities.
  • It has due regard to the range of the accountable person’s total supplies and activities.

Examples of possible apportionment methods include calcula­tions based on the following:

  • The ratio of turnover from taxable and qualifying activities to turnover from exempt activities
  • The ratio of taxable transactions to exempt transactions
  • The number of people involved in various activities

The Revenue Commissioners may require that a partially exempt accountable person uses a different calculation method if, in their view, the method adopted does not adequately reflect how input tax was used in the business or the activities undertaken.

Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired. The amount of input tax recovered depends on the accountable person’s partial exemption recovery position in the VAT year of acquisition. In Ireland, no further adjustment is made to the amount of input tax recovered on the acquisition of capital goods with the exception of immovable goods, even if the ratio of taxable to exempt sup­plies changes in subsequent years.

Refunds. If the amount of input tax recoverable in a period exceeds the amount of output tax payable in that period, the accountable person has an input tax credit. An accountable person may claim a refund of the credit by submitting the VAT return for the period. If an accountable person normally receives refunds of VAT, it may request permission to submit monthly returns to improve cash flow.

Preregistration costs. VAT paid on costs incurred before registra­tion are not recoverable.

Write-off of bad debts. The process of accounting for VAT on bad debts depends on whether the VAT was already paid to the sup­plier or if it was deducted but not yet paid.

In cases where VAT was already paid, the bad debt is allowable as a deduction for VAT if the following conditions are satisfied:

  • The VAT paid was properly paid.
  • The taxable person has taken all reasonable steps to recover the debt.
  • The bad debt has been written off in the financial accounts of the taxable person.
  • The person from whom the debt is due is not connected with the taxable person.

Where a person deducts VAT in a taxable period but has not, within six months of the end of that taxable period, paid the sup­plier for the goods or services, then the amount of VAT deduct­ible will be reduced by the amount of VAT relating to the unpaid consideration, i.e., the VAT deducted relating to the unpaid consideration must be repaid to Revenue. A readjustment is pro­vided for in the event of subsequent payment or part payment for the goods or services. The corresponding (re)adjustments should be declared on the corresponding periodic VAT return(s).

Noneconomic activities. Not applicable.

Recovery of VAT by non-established businesses

Ireland refunds VAT incurred by businesses that are not established in Ireland nor registered for VAT there. A non-established busi­ness may claim Irish VAT to the same extent as a VAT-registered business.

For businesses established in the EU, applications for refunds are made electronically to the tax authority in their Member States. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. Ireland does not exclude claims by businesses established in any country.

For the general VAT refund rules of the EU 13th Directive refund scheme, see the chapter on the EU.

Refund application. For non-EU claimants, the deadline for refund claims is 30 June of the year following the year in which the tax was incurred. For EU claimants, the deadline is 30 September of such year.

The claim must be for a period of not less than a calendar quarter, unless it is for the final part of a year, and the period may not be longer than a calendar year. For claims covering a period of between three months and one year, the minimum claim amount is EUR400. The repayment is made by a check issued in euros or by direct deposit into a bank account.

Applications for refunds of Irish VAT by non-EU claimants may be sent to the following address:

VAT (Unregistered) Repayments

Office of the Revenue Commissioners

3rd Floor

River House

Charlotte’s Quay

Limerick

Ireland

Repayment interest. Claims are normally paid within three to six months after submission of the claim. For Irish VAT recovery claims from EU-based entities, in certain circumstances, interest is paid on repayments at a rate of 0.011% per day if the payment falls outside specific legislative time limits. For Irish VAT recov­ery claims by non-EU entities, interest is not paid by the Irish tax authorities on late repayments.

Invoicing

VAT invoices and credit notes. An Irish accountable person must issue a VAT invoice for taxable supplies made to taxable custom­ers, exempt persons, government departments, local authorities, and bodies established by statute. An Irish accountable person must also issue an invoice with respect to intra-Community sup­plies to businesses in other EU Member States and to sales to private individuals in other EU Member States under distance selling arrangements. A VAT invoice must be issued within 15 days after the end of the month in which either the goods or ser­vices were supplied or an advance payment was received.

A VAT invoice is necessary to support a claim for input tax deduction or an Irish VAT refund application under the EU 13th Directive for non-EU businesses or under the VAT refund proce­dure applicable to EU businesses (see the chapter on the EU).

A VAT credit note must be used if the VAT payable on a supply is reduced because of a subsequent allowance or discount, unless the supplier and taxable customer agree that the VAT need not be adjusted. The credit note must be cross-referenced to the original VAT invoice and contain the same information.

Electronic invoicing. Effective 1 January 2013, the VAT law has been amended to permit electronic invoicing in line with EU Directive 2010/45/EU.

Proof of exports and intra-Community supplies. VAT is chargeable at a zero rate on the supply of exported goods or on the intra­Community supply of goods (see the chapter on the EU). However, to qualify for a zero rate, exports and intra-Community supplies must be supported by evidence that confirms the goods have left Ireland. Acceptable proof includes the following documentation:

  • For an export, a copy of the export document officially vali­dated by customs showing the supplier as the exporter, together with shipping or air freight documents, and copies of commer­cial documentation (for example, orders, copy invoices, dispatch notes and delivery notes).
  • For an intra-Community supply, a range of commercial docu­mentation, including purchase orders, transport documentation, proof of payments received from abroad and contracts. The EU VAT registration number of the customer must also be quoted on the sales invoice.

Foreign-currency invoices. A VAT invoice may be issued in a for­eign currency, but the actual VAT amount must be converted to euros and included on all VAT invoices issued. The invoice amounts must be converted using the latest selling rate recorded by the Irish Central Bank at the time of supply.

It is possible to agree on a different exchange rate method with the Irish VAT authorities. If an alternative method is used, the account­able person must use it for all foreign-currency transactions.

B2C invoices. Effective 1 January 2015, new rules apply to the place of supply for supplies of telecommunications, broadcasting and electronic services to non-VAT taxable customers. For fur­ther details of the VAT rules on electronic services in the EU, please refer to the European Union chapter.

VAT returns and payment

VAT returns. Irish VAT returns are generally submitted on a bimonthly basis. All VAT returns must be filed electronically in Ireland. Returns and full payment of the VAT due must be made by the 23rd day of the month following the return period.

Biannual or four-monthly VAT returns may be submitted by traders whose total VAT payment for the year is less than EUR3,000 or between EUR3,000 and EUR14,000, respectively.

An accountable person that receives regular repayments of VAT may request to submit monthly returns.

Annual Return of Trading Details. All accountable persons must submit an Annual Return of Trading Details, which outlines sales and purchases for the year, broken down by VAT rate. It is a sta­tistical return. Consequently, no VAT liability is attached to such return.

Changes to the format of this return, including requirements to provide additional details, are expected to be implemented in 2016.

Annual accounting. Some accountable persons are permitted to submit VAT returns on an annual basis. This facility is granted at the discretion of the Irish VAT authorities. Accountable persons that submit annual returns must also complete the annual return of trading details.

An accountable person that is permitted to use the above facility may align its annual VAT return date with its commercial account­ing year.

An accountable person that is permitted to submit annual returns must make monthly VAT payments by direct debit throughout the year. Interest may be chargeable if the sum of the monthly pay­ments made is less than 80% of the total VAT payable for the year.

Special schemes. Farmers who are not VAT registered can charge a flat rate addition of 5.2% on supplies including, for example, livestock and greyhounds. (The rate is up from 5.0% with effect from 1 January 2015.)

Special treatment for frequent exporters. A business that exports goods to persons outside the EU or to taxable persons in other EU Member States does not charge VAT on these transactions. However, it pays VAT on the goods and services it purchases locally or acquires from other EU Member States and on imports. Consequently, a business that predominantly trades with other countries would generally be in a net VAT repayment position for each period. This may have a negative impact on its cash flow position.

To help ease cash flow for businesses involved in international trade, exporters benefit from a special treatment for purchases. This provision is commonly known as the “VAT 56 Scheme” (formerly the “VAT 13A Scheme”). For these purposes, a quali­fying exporter is an accountable person that derives at least 75% of its turnover from exports of goods from Ireland and from intra­Community supplies of goods from Ireland to persons registered for VAT in other EU Member States. Qualifying exporters may apply for certification of their entitlement to relief. Copies of the certification must be provided to suppliers that are required to supply most goods and services to qualifying exporters at the zero rate.

The VAT 56 zero rating applies to most domestic purchases of goods and services, imports and intra-Community acquisitions. The zero rating does not apply to the supply or hire of passenger cars, petrol (gasoline) for cars, food, drink, accommodation, non-business purchases or any other expenses for which the input tax is not deductible.

Electronic filing and archiving. It is not required to retain the paper originals of any third-party record where an electronic copy of the original record is generated, recorded and stored and the person is able to certify the following:

  • The stored records were not damaged or amended.
  • Proper security procedures were in place to prevent tampering.
  • Programs are in place that will reproduce accurately the docu­ments that are stored.
  • A proper systems audit takes place annually to ensure that the instructions on the use of the system have been followed cor­rectly and are in accordance with operational requirements.
  • Copies of records must be accessible to Revenue in the way and format they may request.

Penalties

The basic penalty for the late submission of a VAT return is EUR4,000 per return. However, if the Irish VAT authorities deter­mine that an error was made as a result of the taxpayer acting carelessly or deliberately defaulting, penalties may be imposed based on the amount of VAT underpaid or overclaimed. Such pen­alties can be between 3% and 100% of the VAT liability at issue.

Interest may also be levied on the amount of tax due at the rate of 0.0274% per day.

The Irish VAT authorities may mitigate penalties in certain cir­cumstances.

EU filings

Intrastat. An accountable person that trades in goods with other EU countries must complete statistical reports, known as Intrastat, if the value of its intra-Community sales or purchases of goods exceeds certain thresholds. Separate reports are required for intra-Community acquisitions (Intrastat Arrivals) and intra­Community supplies (Intrastat Dispatches).

The threshold for Intrastat Arrivals is EUR500,000. The threshold for Intrastat Dispatches is EUR635,000.

The Intrastat return period is monthly. The submission deadline is the 23rd business day of the month following the return period. Intrastat returns must be filed electronically through the Revenue On-Line System (ROS). Returns must be completed in euros.

The penalty for a late or incorrect submission of an Intrastat return is EUR1,265 plus EUR60 per day that the return is out­standing.

EU Sales Lists (VAT Information Exchange System [VIES] state­ment). If an Irish accountable person makes intra-Community supplies of goods and/or services, it must submit an EU Sales List (ESL). No threshold applies to ESLs. If no intra-Community supplies are made in a period, a “nil” statement must be submit­ted for that period.

ESLs are submitted quarterly if the quarterly amount of intra­Community supplies of goods does not exceed EUR50,000. Otherwise, ESLs are submitted monthly. An accountable person that is entitled to submit ESLs on a quarterly basis may apply to submit ESLs monthly if it is more convenient to do so. The sub­mission deadline is the 23rd day of the month following the end of the return period.

The penalty for a late or incorrect submission of an ESL is EUR4,000.