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 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 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 service, 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 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 you 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 € 75,000 (effective 1 May 2008, €70,000 before that date) in any continuous 12 month period,

(b) your turnover from the supply of taxable services exceeds, or is likely to exceed € 37,500 (effective 1 May 2008, €35,000 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

A new VAT on property regime operates from 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.

The “old” property transaction rules are confined to transactions before 1 July 2008.

As regards transitional properties (subject to tax under the old rules but disposed of under the new rules):

(a) If you were not entitled to reclaim VAT on a developed property before 1 July 2008, and without developing the property you supply it after that date, the supply is exempt, but you may make a joint option for taxation with the acquirer.

(b) If you are a taxable person and you short-term let a property, there may be a deductibility adjustment.

(c) If you assign/surrender a lease within 20 years of a previous taxable supply, the assignment/surrender is treated as a supply.

(d) If you are not entitled to a full input deduction, and you supply a property, you may make a capital goods adjustment.

(e) If you are entitled to an input deduction and you assign/surrender a lease, the assignment/surrender is taxable. If you are not entitled to an input deduction, the assignment/surrender is exempt, but you may, together with the acquirer, may make a joint option for taxation.

(f) When you assign/surrender a lease, the reverse charge rule applies, i.e., the assignee/surrenderee must pay the VAT.

(g) When you assign/surrender a lease, you must issue a VAT document to the assignee/surrenderee, who thereafter is treated as a capital goods owner for the purposes of the capital goods scheme.

(h) If you wish to cancel your election in relation to a holiday home, the old rules apply provided the home was owned on 1 July 2008 and not developed after that date.

(i) Certain parts of the capital goods scheme do not apply to transitional properties.

(j) If you acquired the property after 1 July 2007, you must make a capital goods scheme adjustment, unless you made a dual-use inputs adjustment before 1 July 2008.

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 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 (effective 1 January 2010) 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.

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

(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.

(xixa) Non-oral contraceptives.

(xxa) Greyhound food supplied in packages of 10kg 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 €37,500 in any continuous 12 month period.

(viic) Golf facilities provided by a non-profit body if the body’s turnover exceeds €37,500 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. 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) 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 0.0274% 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 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).

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 23). The income tax appeal procedures apply (s 25).