Value Added Tax Consolidation Act 2010 section 59

Deduction for tax borne or paid

Section 59 sets out the rules on deductibility of input VAT, defining the categories of tax that an accountable person may deduct when computing VAT payable for a taxable period.

• An accountable person may deduct input VAT on purchases, imports, intra-Community acquisitions, reverse-charge supplies, and certain other categories of tax, provided the goods or services are used for taxable supplies or qualifying activities.
• Qualifying activities entitling a person to input credit include passenger transport outside the State, distance selling to another Member State, exempt financial or insurance services supplied outside the Community or in connection with exports, and supplies outside the State that would be taxable if made in the State.
• A partial deduction of 20 per cent of the VAT on a qualifying vehicle is available where the vehicle is used primarily (at least 60 per cent) for business purposes, and subsequent disposal of that vehicle is not subject to VAT.
• Stock-in-trade relief allows a newly registered person to treat an estimated VAT element in trading stock held immediately before the first taxable period as a deductible credit, and any excess of input credit over output liability is refundable.