Directive

Article 184 [Initial deduction to be adjusted if incorrect]

Article 185 [Reasons for adjustment of deductible VAT]

Article 186 [Detailed rules for 184 and 185]

Article 187 [Capital goods adjustment]

Article 188 [Capital goods supplied during adjustment period]

Article 189 [Member States may define capital goods and adjustment period]

Value Added Tax Consolidation Act 2010 section 63

Interpretation and application

Section 63 defines the key terms used in the capital goods scheme (CGS) and sets out the scope of the scheme's application.

The CGS adjusts VAT recovery over the VAT life (adjustment period) of a developed property — generally 20 intervals for new builds and 10 for refurbishments — to ensure the amount reclaimed each year reflects actual taxable use.
The initial interval is the first 12 months following completion (or, for a purchaser of a completed property, the first 12 months from the date of supply), and the proportion of deductible use during that period becomes the benchmark against which all later intervals are compared.
Total tax incurred is the VAT charged on acquiring or developing the property; where the property was acquired VAT-free under a transfer-of-business (section 20(2)(c)) or under section 56 arrangements, the figure is the VAT that would have been chargeable had those relieving provisions not applied.
The scheme applies only to capital goods on which VAT was, or would have been, chargeable to a taxable person carrying on a business in the State — it does not extend to private individuals or non-business use.

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