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.

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 goods under a hire purchase type agreement.

(c) Hand over (as a property developer) land or buildings to a person which you have developed on behalf of that person.

(d) Compulsorily purchase goods by or on behalf of the State or a local authority, or 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 a borrower, transfer ownership of goods to a lender as security for a loan or debt.

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

(iii) Transfer 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 29(1)(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 24(1)).

(b) If you supply goods that are assembled or installed, the place of supply is where the goods are assembled or installed (s 29(1)(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 29(1)(d)).

(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 29(1)-(2)).

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

There are two place of supply rules, depending on whether customer is a business (B2B service) or a consumer (B2C service): 

(a) For B2C 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 34).

(b) For B2B services, the place of supply is where the recipient is established - the "reverse charge rule." As supplier, you must obtain the recipient's VAT number and record it on the invoice. 

Exceptions – the following services are treated as supplied where physically performed: property-related services, passenger transport, restaurants, cultural services, hire of means of transport.

Taxable person

Meaning of taxable person

You are a taxable person and must register for VAT (s 65) if:

(a) your turnover from the supply of taxable goods exceeds, or is likely to exceed €75,000 in any continuous 12 month period,

(b) your turnover from the supply of taxable services exceeds, or is likely to exceed €37,500 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.

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 29(1)).

Property transactions

A new VAT on property regime has operated since 1 July 2008. It exempts supplies of:

(a) undeveloped land,

(b) immovable goods (land or buildings) where the most recent development was more than five years before the supply,

(c) a completed property occupied for at least 24 months since its most recent development, where a taxable supply has occurred since that development between unconnected persons,

(d) a property completed more than five years before the supply, provided only “minor” work was carried out before the supply, i.e., work which does not adapt the property for materially altered use and the cost of which does not exceed 25% of the sale price,

(e) a property completed more than five years before the supply, provided it was occupied for at least 24 months since its completion, the previous supply was taxable and between unconnected persons, and only “minor” work has been carried out since then, i.e., work which does not adapt the property for materially altered use and the cost of which does not exceed 25% of the sale price.

As in the old regime:

(a) a supply of a site with an agreement to develop remains taxable,

(b) there is no registration threshold for property transactions.

If you make an exempt supply of property, you may, together with the acquirer of the property, make a joint option for taxation. In such a case, the acquirer is accountable for the VAT.

If you develop residential property, your first supply of that property is taxable. If you let the property before the first supply, you must make a capital goods scheme annual adjustment (see below), and the subsequent first sale remains taxable.

Self-supply of immovable goods. If you claim a VAT deduction on acquiring or developing a property, any private or non-business use within the next 20 years is a self-supply.

Waiver of exemption. No new waivers, or extensions to existing waivers, apply on or after 1 July 2008. If you have an existing waiver, it ceases (and tax is payable) if you (as landlord) and your tenant are connected and you would not be entitled to the option to tax. If the tax payable is less than a calculated amount, the waiver may continue. The capital goods scheme does not apply to a property covered by a waiver.

Option to tax letting of property. As a landlord, you may opt to charge VAT on lettings of commercial property. You exercise the option by including an appropriate provision in the letting agreement. You end it:

(a) by making an exempt letting,

(b) by written agreement with your tenant,

(c) by notifying your tenant accordingly,

(d) by becoming connected with your tenant,

(e) if a connected person occupies the premises,

(d) if the property is used as a residence.

You may not opt to tax a letting to a connected person, unless the connected tenant uses the property for an activity in relation to which he is entitled to 90% deductibility.

Capital goods scheme. Since 1 July 2008, new deductible VAT rules apply to developed property (capital goods). A property’s tax-life (adjustment period) is generally 20 years (10 years for refurbishment). You adjust the deductible VAT by comparing the VAT deducted when you acquired/developed the property with your proportion of taxable use during the initial interval. Depending on whether your taxable use has increased or decreased, you will pay VAT or get an increased deduction.

If you were not entitled to full VAT credit when you acquired/developed the property, and the sale is subject to VAT, you get a full VAT credit for the non-deductible VAT, scaled back in accordance with the number of years elapsed since you acquired the property. If the sale is exempt, you must repay the VAT deducted when you acquired/developed the property, scaled back in proportion to the number of years elapsed since you acquired it. As a capital goods owner, you must keep a capital good record for each capital good.

VAT rates

Current VAT rates

The current VAT rates are (s 46(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 86(1)).

(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:

Intra-Community transactions

1. (1) Supplies to a VAT-registered person in another EU State.

(2) The supply of new means of transport, dispatched or transported to a person in another EU State.

(3) The supply of excisable products, dispatched or transported to a person in another EU State.

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

Imports

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

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

Exports

3. (1) The export of goods to a place outside the EU.

(2) Carriage of goods within the State where part of a contract to transfer the goods to a place outside the EU.

(3) Goods supplied to an authorised exporter.

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

Services relating to vessels and aircraft

4. (1) The provision of port or airport facilities (docking, landing, loading, unloading) for passengers and goods.

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

(3) The supply, maintenance, repair and hire of equipment for use in sea-going vessels in (2).

(4) The supply, maintenance, repair and hire of equipment for use in aircraft in (2).

(5) The supply of fuel and provisions for a sea-going ship or international commercial aircraft.

(6) The supply of navigation services by the Irish Aviation Authority.

Transactions treated as exports

5. (1) The supply of goods or services to certain international bodies.

(2) The supply of gold to the Central Bank.

Services by intermediaries

6. (1) Export agency services.

(2) Export agency services include services in relation to: carriage of goods to or from the Azores or Madeira; carriage of goods in transit to a place outside the EU; provision of docking, landing, loading or unloading facilities; the supply, maintenance, hire and repair of equipment for sea-going vessels; the supply of gold to the Central Bank.

(3) Intermediary services in relation to the travel agent’s margin scheme.

International trade etc

7. (1) The supply of goods by a VAT-registered person in a free port to another such person.

(2) The supply of goods by a VAT-registered person in the Shannon zone to another such person.

(3) The supply of goods to be transported directly or on behalf of the supplier to a VAT-registered person in the Shannon zone.

(4) The supply of traveller’s goods (goods brought abroad by a traveller in accordance with the retail export scheme), provided the conditions are met.

(5) VAT repayment services in relation to traveller’s goods.

(6) The supply of goods in a tax-free shop to travellers departing the State to a place outside the EU.

The supply of food, drink and tobacco, to passengers travelling to another EU State, for consumption on board the ship or aircraft.

(7) The supply of goods and services to a qualifying export business.

Food and drink

8. (1) Food and drink for human consumption, excluding:

(a) alcoholic drinks,

(b) tea, coffee, etc in drinkable form,

(c) ice cream, frozen desserts, yogurts, cereal or grain savoury products,

(d) potato crisps, popcorn, salted or roasted nuts,

(e) chocolates, sweets, biscuits, confectionery, but not plain bread.

(2) “Supplying food and drink” includes supplying food without drink and vice versa.

Certain printed matter

9. Printed books and booklets, but not newspapers, stationery, albums, and books of stamps, coupons or tickets.

Children’s clothing and footwear

10. (1) Children’s clothing, i.e., clothing of sizes not exceeding the size appropriate to a 10-year old child of average build.

(2) Children’s footwear, i.e., footwear of a size not exceeding the average size for a 10-year old child.

(3) A 10-year old child means a child under eleven years of age.

Medicine, medical equipment and appliances

11. (1) Medicine for human oral consumption.

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

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

Fertilisers, feeding stuffs, certain seeds etc

12. (1) Animal feed other than pet food.

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

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

Other zero-rated goods and services

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

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

(3) Sanitary towels and tampons.

Air traffic control services supplied by the Irish Aviation Authority.

(4) Plain white wax candles and night lights.

Low rate (13.5%)

The goods and services chargeable to VAT at 13.5% (Schedule 3) are:

Definitions

1-2. Definitions.

Food and drink for human consumption

3. (1) Food and drink provided for human consumption by a vending machine, or in the course of catering (i.e., in the course of operating a hotel, restaurant, canteen, pub, catering or similar business).

(2) The supply, in the course of catering, of ice cream, frozen desserts, frozen yoghurts etc, potato crisps, popcorn and salted or roasted nuts, and non-alcoholic drinks.

(3) Hot take away food.

(4) Hot take away food does not include bread that does not meet the ingredient requirements.

(5) Cakes, crackers, wafers and biscuits, excluding:

(a) cakes etc food in question is not covered, or decorated with chocolate,

(b) ice cream, frozen desserts, etc,

(c) chocolates, sweets and similar confectionery.

Live animals, animal feeding stuffs

4. (1) Greyhound feed supplied in units of 10 kg or more.

(2) Live poultry and live ostriches.

Pharmaceutical products

5. Non-oral contraceptives.

Certain safety equipment

6. Children’s car safety seats.

Books, newspapers and other printed matter

7. Printed newspapers and magazines, brochures, leaflets and programmes, catalogues, directories, maps, charts, sheet music – provided the material in question does not consist mainly of advertising.

Shows, exhibitions, cultural facilities, etc

8. (1) Cinema admission charges.

(2) Promotion of, and admission to, live theatre and concert shows, other than dances, which are not exempt.

(3) Amusement services.

(4) Admission to artistic, cultural, historical or scientific exhibitions (that are not exempt).

Private dwellings

9. (1) Services consisting of the development of immovable goods consisting of private dwellings, i.e., building type work (subject to the two-thirds rule).

(2) Routine cleaning of private dwellings.

Agricultural goods and services

10. (1) Agricultural services.

(2) Animal insemination services.

(3) Livestock semen.

Hotels, holiday accommodation

11. Accommodation in a hotel, guest house, holiday home or caravan park.

Sporting facilities

12. (1) Commercial sports facilities.

(2) Golf facilities provided by a member-owned golf club, if the turnover exceeds €37,500 in any continuous 12 month period.

(3) Golf facilities provided by a non-profit body, if the turnover exceeds €37,500 in any continuous 12 month period.

Other services

13. Waste disposal services.

Housing

14. The supply of immovable goods used for residential purposes, i.e., houses and apartments.

Non-residential immovable goods

15. (1) The supply of immovable goods not used for residential purposes, i.e., commercial property.

(2) Services consisting of the development of commercial property, i.e., building type work (subject to the two-thirds rule).

(3) Routine cleaning of commercial property.

Concrete works

16. (1) Concrete ready to pour.

(2) Standard-sized concrete building blocks.

Energy products and supplies

17. (1) Coal, peat and solid fuel products.

(2) Electricity.

(3) Domestic or industrial gas for heating or lighting.

(4) Home heating oil.

Photographic and related supplies

18. (1) Photographic development services.

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

(3) Professional photographic services.

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

(5) Film editing services.

(6) Photographic agency service receipts.

Hiring for short periods

19. Short-term hire of road vehicles, boats, caravans, mobile homes, and tents.

Certain repairs and services

20. (1) 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).

(2) Zero-rated repair work (on movable goods for export, on aircraft or sea-going vessels, or on equipment used in international aircraft) is excluded from (1).

Miscellaneous services

21. (1) Care of the human body (health studios).

(2) Professional jockey services.

(3) Professional veterinary services.

(4) Tour guide services.

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

Plants and bulbs

22. (1) Nursery or garden centre produce.

(2) Goods used for the agricultural production of biofuel.

Works of art

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

Antiques

24. Antiques more than 100 years old.

Literary manuscripts

25. Literary manuscripts certified as being of major importance.

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 47).

A new package rule is due to come into effect. 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 41).

Exempted activities

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

Postal services

1. Public postal services.

Medical and related services

2. (1) Medical care or treatment provided by a hospital, nursing home or clinic.

(2) Home care services undertaken on behalf of the Health Service Executive.

(3) Professional medical care services.

(4) Dental technician services and the supply of dentures and other dental prostheses.

(5) Professional dental or optical services.

(6) The collection, storage, supply, intra-EU acquisition and importation of human blood, milk and organs.

Independent groups, non-profit making organisations and other bodies

3. (1) Services supplied by an independent tax-exempt entity established for administrative convenience in order to render services to the members.

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

(3) Goods and services supplied to its members by a non-profit body.

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

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

Childcare and education

4. (1) Non-profit childcare services.

(2) Childcare provided by regulated childcarers.

(3) Educational activities.

Other activities

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

(2) The promotion of, and admission to, live theatre, concert and circus shows.

(3) The promotion of sporting events.

(4) The national broadcasting and television service.

Financial services

6. (1) Financial services: these include all the usual banking type services – lending money, operating bank accounts, credit card management, issuing, transferring and dealing in stocks etc.

(2) They also include managing a collective investment undertaking.

(3) A determination by the Minister for Finance that an undertaking is a collective investment undertaking takes effect from the date of the determination.

(4) Management of an undertaking is as defined by EU law.

Agency services

7. Insurance premium collection services, insurance agency services, and financial agency services.

Insurance and reinsurance services

8. (1) Insurance services.

(2) Related insurance services include collecting premiums and claims-handling.

Investment gold

9. (1) The supply, intra-Community acquisition and importation of investment gold.

(2) Acting as an intermediary in relation to investment gold.

Gambling and lotteries

10. (1) The taking of bets.

(2) The issue of lottery tickets.

Letting of land and buildings

11. (1) Letting of land or buildings, but excluding letting of machinery, hotel or holiday accommodation, provision of sports facilities, car parking and the provision of safes.

(2) Permission to use a toll road is not exempt.

Other supplies of goods

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

Gas and electricity services

13. (1) Importation of gas through the natural gas system.

(2) Importation of electricity.

Exemptions by derogation

14. (1) Funeral undertaking.

(2) The supply of water by local authorities.

(3) The transport of passengers with their baggage.

(4) Admission to sports events.

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 36-43).

Cash receipts basis

You may account for VAT on the cash receipts basis (s 80) 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 s 74-79).

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 91(6)(a)-(b)).

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 110).

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 82).

Revenue powers

Administration

The Revenue Commissioners are responsible for the administration of VAT (s 106).

Audit

You must keep full and true records of all transactions which affect or may affect your VAT liability (s s 84-85).

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 66-72).

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 108).

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 111).

Collection

You are liable to interest at 0.0274% for each day the VAT is unpaid.

Penalties

If you fail to comply with VAT obligations, you are liable to a penalty of €5,000 (s 115). 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 116).

See INCOME TAX (Penalties) as regards enforcement of penalties.

Appeals

If you are aggrieved by an assessment to VAT, you may appeal within 14 days of the notice of assessment (s 111). The income tax appeal procedures apply (s 119).