Value Added Tax Consolidation Act 2010 section 61

Apportionment for dual-use inputs

Section 61 sets out the rules for apportioning input VAT on dual-use inputs between taxable and non-taxable activities, so that only the proportion attributable to taxable supplies may be deducted.

• Where a trader makes both taxable and non-taxable supplies and acquires goods or services used for both purposes (dual-use inputs), only the proportion of input VAT attributable to the taxable activity may be deducted — this proportion is referred to as the VAT recovery rate.
• The deductible proportion is normally calculated as the ratio of VAT-exclusive turnover from taxable supplies to VAT-exclusive turnover from all supplies and activities, but an alternative basis must be used where the turnover method does not correctly reflect the actual taxable use of the inputs.
• Where necessary to achieve an accurate result, the trader must calculate separate recovery rates for different parts of the business and must exclude incidental financial-services transactions or incidental property transactions from the calculation.
• The recovery rate for a taxable period may be adjusted by reference to the full accounting year to ensure that the proportion of tax deductible correctly reflects the annual profile of the business rather than a single two-month period.