Charge to tax

You are potentially accountable for Irish value added tax (VAT) if you are a taxable person who engages in:

(a) the supply of goods, or

(b) the supply of services,

within the Republic of Ireland for consideration in the course or furtherance of business (s 2).

You are also charged VAT if you import goods into the Republic of Ireland from outside the EU.

You may be subject to VAT on intra-Community acquisitions of goods:

(a) movable goods (other than new cars, boats, or planes) acquired by you from a person who is registered, or ought to be registered, for VAT in another EU State, and

(b) new cars, boats and planes (new means of transport) acquired by you from a person in another EU State.

Supply of goods

Meaning of supply of goods

You engage in the supply of goods when you:

(a) Transfer ownership of goods by agreement.

(b) Hand over of goods under a hire purchase type agreement.

(c) Hand over to a person by a property developer of land or buildings which he has developed on behalf of that person.

(d) Compulsorily purchase goods by or on behalf of the State or a local authority. Seize goods acting under statutory authority.

(e) Apply goods from a taxable to an exempted activity, i.e., make a self-supply to an exempted activity.

(f) Appropriate business goods to non-business use, i.e., make a self-supply to non-business use.

(g) Transfer goods for business purposes from a business in the Republic of Ireland to a branch of the business in another EU State.

You do not engage in the supply of goods when you:

(i) As borrower, transfer ownership of goods to a lender as security for a loan or debt.

(ii) As lender, transfer ownership of goods back to the borrower on redemption of the loan.

(iii) Transfer of ownership of goods in connection with the transfer of a business or part of a business to another taxable person.

Place of supply of goods

The general rule is that a supply of goods takes place where the goods are located at the time of the supply (s 3(6)(c)).

The exceptions to the general rule are:

(a) If you supply goods (other than a new boat, plane or vehicle) to a customer in another EU State (i.e., if you make an intra-Community supply of goods) the place of supply is where the goods’ journey ends. But if your customer is registered for VAT, it is treated as supplied in the EU State that issued the customer’s VAT number.

If you supply a new boat, plane or vehicle to a customer in another EU State, the place of supply is where the goods’ journey ends (s 3A(1)).

(b) If you supply goods that are assembled or installed, the place of supply is where the goods are assembled or installed (s 3(6)(b)).

(c) If you supply goods supplied on board a boat, plane or train travelling between EU States, the place of supply is the EU State of departure (s 3(6)(cc)).

(d) If you are a distance seller, i.e., selling into an EU State where you have no establishment, the place of supply is where the goods’ journey ends (s 3(6)(d)).

Supply of services

Meaning of supply of services

You supply a service when you engage in “the performance or omission of any act, or the toleration of any situation” other than a supply of goods.

Place of supply of services

The general rule is that your place of establishment determines where your service is supplied. If you have several establishments, the supply takes place at the establishment most concerned with the supply; if you have no establishment, it takes place at your usual place of residence (s 5(5)).

The exceptions to the general rule are:

(a) If you supply a service connected with land and buildings the place of supply is where the land and buildings are located (s 5(6)(a)).

(b) If you supply a cultural, artistic, sporting, scientific, educational or entertainment services the place of supply is where the service is physically performed (s 5(6)(c)(i)).

(c) If you supply a service consisting of valuation of movable goods the place of supply is where the service is physically performed (s 5(6)(c)(iii)).

(d) If you supply a service consisting of work on movable goods the place of supply is where the service is physically performed (s 5(6)(c)(iv)).

(e) If you supply Fourth Schedule services (advertising, banking, copyright, data processing, consultancy, provision of staff, and undertaking not to engage in business), the place of supply depends on the location (EU/non-EU) of the recipient and whether the service is received for business purposes.

Such a service, if received for private purposes by a non-EU resident, is treated as supplied where the recipient is resident.

If received for business purposes, it is generally treated as supplied where the recipient is has his establishment. This is known as the “reverse charge” mechanism.

If received for private purposes by an EU resident, other than in circumstances where the recipient held himself out to be taxable in respect of the supply, it is taxed according to the general rule, i.e., where the supplier has his business establishment (s 5(6)(e)).

(f) If your are established in the EU, and you hire goods (other than means of transport), the supply is taxed on a reverse charge basis - see (e).

If you are established in the EU, and you hire a means of transport the supply is subject to the general rule, i.e., it is treated as supplied where you are established.

(g) if you are not established in the EU, and you hire movable goods the place of supply is where the goods are used (s 5(6)(d)).

(h) If you transport goods, the place of supply is generally where the transport takes place (s 5(6)(b)).

If you transport goods within the EU, the place of supply is the EU State of departure, but if the customer is registered for VAT, the place of supply is the EU State that issued the customer’s VAT number (s 5(6) (f)(i)).

(i) If you supply agency services relating to, or services ancillary to, the transport of goods the place of supply is generally where the service is physically performed (s 5(6)(c)(ii), (g)(ii)).

However if you supply such services within the EU the place of supply is generally the EU State of departure, but if the customer is registered for VAT, it is the EU State that issued the customer’s VAT number (s 5(6)(g)(i), (f)(ii)-(iii)).

Taxable person

Meaning of taxable person

You are a taxable person (s 8) and must register for VAT (s 9) if:

(a) your turnover from the supply of taxable goods exceeds, or is likely to exceed €70,000 (effective 1 March 2007, €55,000 before that date) in any continuous 12 month period,

(b) your turnover from the supply of taxable services exceeds, or is likely to exceed €35,000 (effective 1 March 2007, €27,500 before that date) in any continuous 12 month period,

(c) the value of your intra-EU acquisitions exceeds, or is likely to exceed €41,000 in any continuous 12 month period,

(d) you dispose of a taxable interest in developed property (see Property transactions below), or

(e) you receive Fourth Schedule services from abroad.

If you are a farmer or sea-fisherman you are not obliged to register but may elect to do so (s 8(1)-(3)).

If you are a distance seller selling into Ireland you must register for VAT if your turnover from the supply of goods in the Republic of Ireland exceeds, or is likely to exceed €35,000 in a calendar year (s 3(6)).

Property transactions

You must charge VAT on the supply of property (s 4), i.e., land or buildings (immovable goods) which has been developed since 1 November 1972. In this context, development means:

(a) the construction, demolition, extension, alteration or reconstruction of any building on the land, or

(b) the adaptation of land for materially altered use.

The four questions to be answered in relation to a property transaction are:

(a) Has the property been developed since 1 November 1972?

(b) Have you a taxable interest in the property, i.e., an interest of not less than 10 years, and have you disposed of such an interest?

(c) Is your disposal of that interest in the course or furtherance of business?

(d) Are you, or were you, entitled to a purchases VAT deduction on the acquisition or development of the property?

If the answer to any of these questions is no, no VAT is chargeable.

If the answer to all four questions is yes, the next step is to look at the type of interest being disposed of:

(a) Freehold interest: VAT is chargeable on the full sale price.

(b) Lease of 10 years or more: If the lease allows for a rent review within five years, the interest disposed of must be valued by a professional valuer.

If there is no rent review in the first five years, you may value the interest disposed (Value Added Tax Regulations 1979 r 19) by any of the following methods:

(i) Three-quarters of the annual rent multiplied by the number of complete years in the lease.

(ii) The capitalised value of the annual rent, calculated by reference to the return on the latest issue of government stock. This is computed by multiplying the annual rent by the latest multiplier issued by Revenue. The multiplier changes each time a new government stock is issued. The latest multiplier (effective 1 February 2004) is 21.27 based on a redemption yield of 4.702%.

(iii) Professional valuation.

If the lease is between 10 and 20 years, you are regarded as having disposed of the entire property: the leasehold interest disposed of is valued in the manner described in the previous paragraphs; the future reversionary interest is valued as the difference between the value of the lease and the value of the entire property. You are treated as having made a self-supply equivalent to the value of the future interest.

(c) Lease of less than 10 years: Normally regarded as a short-term letting (exempt: Sch 1 para (iv)) but if you reclaimed VAT on the development, the disposal is treated as a self-supply. You may waive your exemption and opt to be chargeable to VAT on the rental income (s 7).

VAT Rates

Current VAT rates

The current VAT rates are (s 11(1)):

(a) 0% (the zero rate).

(b) 5.2% (the flat rate). This rate applies to supplies of live cattle, deer, goats, greyhounds, horses, pigs and sheep. It also applies to supplies of agricultural produce by flat-rate (i.e., unregistered) farmers (s 12A).

(c) 13.5% (the low rate).

(d) 21% (the standard rate). This rate applies to goods and services that are not exempt, or specifically liable at 0%, 5.2%, or 13.5%.

Zero rate

The goods and services chargeable to VAT at 0% (Schedule 2) are:

Goods

(i) Exported goods.

(ia) Duty-free goods sold to travellers leaving the Republic of Ireland.

(iiib) Goods imported from outside the EU consigned to another EU State.

(v) Sea-going ships of more than 15 tons and international commercial aircraft.

(va) Equipment for use in international commercial aircraft.

(vb) Fuel and provisions for a sea-going ship or international commercial aircraft.

(via) Goods supplied to an authorised exporter.

(vii) Animal feed other than pet food.

(viii) Fertiliser supplied in packages of 10 kg or more.

(x) Gold supplied to the Central Bank.

(xii) Food and drink for human consumption (but not alcoholic drinks, minerals etc, ice cream, frozen desserts, yogurts, chocolates, sweets, biscuits, confectionery, crisps, snacks, salted nuts and popcorn).

(xiii) Medicine for human oral consumption.

(xiv) Medicine for animal oral consumption (but not for pets).

(xv) Food-producing trees, plants, seeds, spores, bulbs, tubers, tuberous roots, corms and rhizomes.

(xva) Printed books and booklets.

(xvii) Children’s clothing.

(xviii) Sanitary towels and tampons.

(xix) Children’s footwear.

(xixa) Invalid carriages and appliances, and artificial body parts (but not artificial teeth, corrective spectacles, and contact lenses).

(xx) Plain white wax candles and night lights.

Services

(iii) The transport of goods in the Republic of Ireland as part of a contract to transport the goods to a place outside the EU.

(iiia) The transport of goods within the EU to and from the Azores or Madeira.

(iv) The provision of port or airport facilities for passengers and goods.

(v) The maintenance, repair and hire of sea-going ships of more than 15 tons and international commercial aircraft.

(va) The maintenance, repair and hire of equipment for use in international commercial aircraft.

(vc) Air traffic control services supplied by the Irish Aviation Authority.

(vi) Export agency services.

(via) Services supplied to an authorised exporter.

(vib) VAT refund services supplied to tourists.

(ix) Lighthouse and navigation services provided by the Commissioner of Irish Lights.

(xi) Life saving services provided by the Royal National Lifeboat Institution.

(xvi) Work on movable goods brought from outside the EU for the purposes of such work.

(xvia) Transport of goods imported from outside the EU (provided the customs value of the goods includes the transport charge).

Low rate (13.5%)

The goods and services chargeable to VAT at 13.5% (Schedule 6) are:

Goods

(i) Electricity and heating fuel.

(ii) Food and drink provided for human consumption by a vending machine, hotel, restaurant, public house, café, canteen, or catering business.

(iii) Ice cream, frozen desserts, yogurts, chocolates, sweets, biscuits, confectionery, crisps, snacks, salted nuts and popcorn provided by a vending machine, hotel, restaurant, public house, café, canteen, or catering business.

(iv) Hot take away food.

(xia) Nursery or garden centre produce.

(xic) Livestock semen.

(xid) Live poultry and live ostriches.

(xii) Printed newspapers and magazines, brochures, leaflets and programmes, catalogues, directories, maps, charts, sheet music.

(xva) Children’s car safety seats.

(xvi) Original works of art (paintings, sketches, engravings, sculptures).

(xvia) Antiques more than 100 years old.

(xvii) Literary manuscripts certified as being of major importance.

(xxa) Greyhound food supplied in packages of 10 kg or more.

(xxiii) Photographs and negatives supplied by a professional photographer.

(xxiv) Passport photographs supplied by a photographic vending machine.

(xxviii) Developed land or buildings.

(xxxi) Cakes, crackers wafers and biscuits (i.e., flour or egg-based bakery products) but not chocolate-covered wafers and biscuits, frozen desserts, savoury snacks, chocolates, sweets, and similar confectionery.

(xxxii) Concrete ready to pour.

(xxxiii) Standard-sized concrete building blocks.

Services

(v) Cinema admission charges.

(vi) Admission to theatre and concert shows (that are not exempt: Sch 1 para (viii)).

(vii) Fairground amusement receipts.

(viia) Commercial sports facilities.

(viib) Golf facilities provided by a member-owned golf club if the club’s turnover exceeds €35,000 in any continuous 12 month period.

(viic) Golf facilities provided by a non-profit body if the body’s turnover exceeds €35,000 in any continuous 12 month period.

(viii) Waste disposal services.

(ix) Admission to artistic, cultural, historical or scientific exhibitions (that are not exempt: Sch 1 para (viiia)).

(x) Professional veterinary services.

(xi) Agricultural services.

(xib) Animal insemination services.

(xiii) Accommodation in a hotel, guest house, holiday home or caravan park.

(xiv) Tour guide services.

(xv) Short-term hire of road vehicles, boats, caravans, mobile homes, and tents.

(xviii) Repair and maintenance of movable goods (but not motor accessories, batteries, tyres, tyre flaps or tyre tubes, supplied in the course of a vehicle service).

(xix) Care of the human body (health studios).

(xx) Professional jockey services.

(xxi) Photographic development services.

(xxii) Professional photographic services.

(xxv) Film editing services.

(xxvi) Photographic agency service receipts.

(xxvii) Driving instruction (other than heavy goods vehicles).

(xxix) Building type work (subject to the two-thirds rule).

(xxx) Routine cleaning of land or buildings.

Package rule

This rule applies if you supply a combination of goods and/or services chargeable at different VAT rates for a single all-inclusive price. In such a case, the entire package is chargeable to VAT at the highest VAT rate applicable to any of the items included in the package (s 11(3)).

A new package rule is due to come into effect in 2006. If you make a composite supply the VAT rate applicable is that which applies to the principal element. If you make multiple supplies, the consideration must be apportioned.

Two-thirds rule

This rule applies if you supply a combination of goods and services for a single price. If the value of goods supplied in the course of providing a service exceeds two-thirds of the total price for the job, the entire transaction is treated as a supply of goods (not a service) (s 10(8)).

Exempted activities

VAT is not charged on an exempted activity, i.e., any of the following activities:

Goods

(vii) Welfare or social security type goods provided by a non-profit body.

(xviia) Investment gold.

(xviii) Human blood, milk and organs.

(xxii) Goods supplied to its members by a non-profit body.

(xxiv) Goods in relation to which the supplier was not entitled to a purchases VAT deduction (for example, a car).

Services

(i) Financial services.

(ii) Educational activities.

(iii) Professional medical services.

(iiia) Dental technician services.

(iiib) Professional dental services and professional optical services.

(iv) Short-term letting of land or buildings.

(v) Medical care provided by a hospital, nursing home or clinic.

(vi) Non-profit childcare services.

(vii) Welfare or social security type services provided by a non-profit body.

(viii) Admission charges to live theatre, concert and circus shows.

(viiia) Cultural services provided by a Revenue-recognised cultural body.

(ix) Travel agency services, insurance premium collection services, insurance agency services, and financial agency services.

(xi) Insurance services.

(xia) The public postal service.

(xiii) The national broadcasting service.

(xiv) The transport of passengers with their baggage.

(xv) The taking of bets.

(xvi) The issue of lottery tickets.

(xvii) Admission to sports events.

(xviib) Investment gold processing services.

(xix) Funeral undertaking.

(xxii) Services supplied to its members by a non-profit body.

(xxiia) Services supplied by an independent administrative entity to VAT-exempt persons.

(xxiii) The provision of sports facilities by a non-profit body.

(xxv) Catering services supplied to patients in a hospital or nursing home, or to students in a school.

Taxable amount

You are liable to VAT on the total consideration which you become entitled to receive in relation to the goods or services you supply. The gross consideration (i.e., the taxable amount) includes all commissions, costs, charges and taxes (apart from VAT) in respect of the supply (s 10).

Cash receipts basis

You may account for VAT on the cash receipts basis (s 14) if:

(a) your turnover derives as to 90% or more from sales to unregistered persons, and

(b) your turnover is less than €1,000,000 in any continuous 12 month period.

Self assessment

You must file a VAT return, and pay the net VAT due as shown on the return, between the 10th and the 19th day of the month following the VAT period (s 19).

If you are an e-commerce trader selling into Ireland you must file a quarterly VAT return on or before the 20th day of the month following the calendar quarter (s 5A(6)).

If you fail to file a VAT return within the time limit, the Revenue may estimate the VAT that should have been paid and notify you of their estimate (s 22).

You must prepare a statement of your intra-EU supplies (VIES statement) in each calendar quarter. You must file that statement to the Revenue before the last day of the month following the calendar quarter (s 19A).

Revenue powers

Administration

The Revenue Commissioners are responsible for the administration of VAT (s 43).

Audit

You must keep full and true records of all transactions which affect or may affect your VAT liability (s 16).

If you supply goods and services to another taxable person, you must issue the recipient a VAT invoice containing the details required by regulations (s 17).

An authorised officer may at all reasonable times enter your business premises and require you, or your employee or associate on the premises, to produce for inspection any records relating to the business (s 18).

If an inspector or other authorised Revenue officer believes that you have underpaid VAT for one or more VAT periods, he may make an assessment of the VAT underpaid (s 23).

Collection

The income tax collection procedures apply for VAT (s 24).

You are liable to interest at 0.0322% for each day the VAT is unpaid.

Penalties

If you fail to comply with VAT obligations you are liable to a penalty of €1,520 (s 26). If the failure is negligent, the penalty is €125 plus the difference between the correct liability and the tax paid. If the failure is fraudulent, the penalty is €125 plus twice the difference between the correct liability and the tax paid (s 27).

Appeals

If you are aggrieved by an assessment to VAT you may appeal within 14 days of the notice of assessment (s 23). The income tax appeal procedures apply (s 25).