Ireland VAT, GST, and Sales Tax Guide

Ireland, Republic of

Dublin GMT

EY

EY Building Harcourt Centre Harcourt Street Dublin 2 Republic of Ireland

Indirect tax contacts

Deirdre Hogan +353 (1) 221-2433 deirdre.hogan@ie.ey.com

Eamonn McCallion +353 (1) 221-1648 eamonn.mccallion@ie.ey.com

Brian Keenan +353 (1) 221-2487 brian.keenan@ie.ey.com

Bernard Kelly +353 (1) 221-2453 ben.kelly@ie.ey.com

Maria Reade +353 (1) 221-2588 maria.reade@ie.ey.com

A. At a glance

Name of the tax Value-added tax (VAT)

Local name Value-added tax (VAT)

Date introduced 1 November 1972

Trading bloc membership European Union (EU)

Administered by The Revenue Commissioners (http://www.revenue.ie)

VAT rates

Standard 23% Reduced 9%, 13.5%

Other Zero-rated (0%) and exempt

VAT number format IE 1234567 A

return periods Bimonthly (standard), four monthly, biannually and annually

Thresholds

Established

For persons supplying services EUR37,500

For persons supplying goods EUR75,000

Non-established businesses

None

Distance selling EUR10,000

Intra-Community acquisitions EUR41,000

Electronically supplied services EUR10,000

Recovery of VAT by non-established businesses Yes

B. Scope of the tax

VAT applies to the following transactions:

• The supply of goods or services made in Ireland by a taxable person

• The intra-Community acquisition of goods from another European Union (EU) Member State by a taxable person (see the chapter on the EU)

• Reverse-charge services received by a taxable person in Ireland

• The importation of goods from outside the EU, regardless of the status of the importer

Quick Fixes. Pending introduction of a “definitive” system for the VAT treatment of intra-Com munity supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Commu nity trade in goods. For an overview of the Quick Fixes rules, see the chapter on the EU.

The four “VAT Quick Fixes” in relation to intra-EU trade took effect in Ireland beginning 1 January 2020. The local law has been transposed directly from the EU Directive. The four VAT Quick Fixes concern the following areas:

• Treatment of call-off stock

• Mandatory VAT identification number to apply the zero VAT rate to intra-EU supplies

• Evidence of intra-EU supplies

• Chain transactions

Effective use and enjoyment. To avoid instances of nontaxation or double taxation, EU Member States can apply use and enjoyment rules that allow a service that is “used and enjoyed” in the EU to be taxed or prevent a service that is “used and enjoyed” outside the EU from being taxed. If a service is taxed in the EU under the use and enjoyment provisions, a non-EU supplier of the service may be required to register for VAT in every Member State where it has customers that are not taxable persons. For information regarding the rules relating to VAT registration, see the chapters on the respective countries of the EU.

In Ireland, the following services are subject to the “use and enjoyment” provisions:

• Hiring out of movable goods by a taxable person established outside the EU is treated for VAT purposes as being hired in the country in which the goods are actually used and therefore Irish VAT arises if the goods are used within Ireland

• Leasing of means of transport outside the EU by a taxable person established in Ireland is treated for VAT purposes as being used and enjoyed outside the EU and therefore no Irish VAT arises.

• Supply of banking, financial and insurance services by a supplier established in Ireland to a nontaxable person outside the EU, where the services are effectively used and enjoyed within Ireland for Irish VAT purposes, the place of supply is Ireland.

• Supply of money transfer intermediary services to a non-EU principal that are used and enjoyed in Ireland for Irish VAT purposes, the place of supply is Ireland (the supply is still exempt from VAT, however).

• Supply of telecommunications, radio or television broadcasting services and phone calls by an operator or broadcaster established outside the EU to a nontaxable person who uses the ser vices in Ireland, the place of supply is Ireland. Supply of such services by an operator or broad caster established in Ireland to a nontaxable person outside the EU who uses and enjoys the service in Ireland is treated for Irish VAT purposes the place of supply is Ireland.

Transfer of a going concern. Transfer of business relief (TOB) in Ireland is a relief from the appli cation of VAT on the transfer of business assets to an accountable person (as defined below, under Section C). The transferred assets must constitute an undertaking or part of an undertaking that is capable of being operated on an independent basis.

Where TOB applies, the transaction is deemed not to be a supply for VAT purposes. Each transaction should be examined on a case-by-case basis to determine whether it comes within the provisions of TOB. However, the following (not exhaustive list) are indicators that the relief should apply:

• The new owner uses the same premises for the same or similar trade.

• The new business has a strong likelihood of taking up the majority of the previous trade.

• Staff are transferred from the old to the new business.

• The new business acquires the order and customer records of the old business.

• The stock-in-trade transfers, plant and machinery are part of the deal.

• The business was closed for a short period or the fact of the closure is irrelevant.

• The relief does not cover transfer of intangible assets (services). This is covered by a separate relief in the VAT Act.

C. Who is liable

The term “accountable person” refers to any individual or entity that is or should be registered for VAT. A liability to register arises from making “taxable supplies,” which include the supply of goods or services, intra-Community acquisitions and distance sales made in the course of a business in Ireland. An entity that exclusively makes exempt supplies is generally not treated as an accountable person.

The VAT registration thresholds in Ireland depend on the type of supplies made. For an Irish resident business or a fixed establishment of a foreign business, the following are the thresholds:

• EUR37,500 for persons supplying services

• EUR75,000 for persons supplying goods

• EUR10,000 for persons making mail order or distance sales into Ireland

• EUR41,000 for persons making intra-Community acquisitions

A business is required to register for VAT as soon as its turnover is likely to exceed the relevant threshold.

Exemption from registration. The VAT legislation in Ireland does not contain any provision for exemption from registration where a business is obliged to register for VAT on the basis of its turnover.

Voluntary registration and small businesses. A business established in Ireland whose turnover does not exceed the registration threshold is not required to register for VAT. However, a business that makes taxable supplies may opt to register in these circumstances.

Similarly, a new business may request registration in advance of making taxable supplies as soon as it is clear that it will become an accountable person.

Group registration. The Revenue Commissioners may grant group registration status to compa nies established in Ireland that are closely bound by “financial, economic and organizational links.”

A VAT group is treated as a single taxable person. Both VAT-registered and non-VAT-registered persons can join a VAT group, provided at least one member of the VAT group is a taxable person (in business). One entity is nominated and treated as if all transactions of the group were carried out by them and is known as the “group remitter” of the VAT group.

C OF

To apply to form a VAT the following criteria must be met:

• The VAT group entities are established for VAT purposes in Ireland.

• The entities are closely linked by financial, economic and organizational links, which typically means being subject to the same common overall ownership and corporate group.

• Group registration seems necessary or appropriate to the Revenue Commissioners for the pur pose of efficient and effective administration (including the collection) of VAT.

VAT is not charged on supplies between group members, with the exception of certain supplies of real estate. All members of a VAT group in Ireland are jointly and severally liable for VAT debts and penalties.

It is the responsibility of the VAT group members to ensure that the conditions for a VAT group continue to be met. Where a member of a VAT group ceases to meet the conditions for inclusion as a member of a VAT group, the Revenue Commissioners should be informed so that the mem ber can be removed from the VAT group. If not so notified, a penalty will apply for each taxable period in which they were not notified.

There is no minimum time period required for the duration of a VAT group.

Holding companies. In Ireland, a pure holding company (that does not perform any taxable activities) can be a member of a VAT group, as long as they are established in Ireland. No special conditions under VAT grouping apply to pure holding companies.

Cost-sharing exemption. The VAT cost-sharing exemption, in accordance with VAT Directive 2006/112/EEC Article 132(1)(f), has not been implemented in Ireland.

Fixed establishment. A foreign business is deemed to have a fixed establishment for VAT pur poses in Ireland in the following circumstances: an entity has an establishment that has the characteristics of a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to receive and use services supplied for its own needs or to supply services to customers.

Non-established businesses. A “non-established business” is a business that has no fixed estab lishment in Ireland. A “nil” VAT registration threshold applies to supplies made in Ireland by a non-established business. VAT registration is required if a non-established business makes any of the following:

• Supply of goods where the goods are located in Ireland at the time of supply

• Supplies of certain services deemed for VAT purposes to have taken place in Ireland (e.g., services connected with immovable property or the admission to events that take place in Ireland)

• Intra-Community acquisitions in excess of the annual threshold or acquisitions of services from non-Irish suppliers

• Distance sales in excess of the annual threshold (see the chapter on the EU)

Registration is not required if all the supplies made by the non-established business are subject to the reverse charge (self-assessment for tax by the recipient of the supply). However, the Revenue Commissioners typically will permit a registration by a business that only supplies services to non-Irish businesses. The reverse charge does not apply to supplies of goods or ser vices made to private persons.

A non-established business may apply to register for VAT in Ireland at the following address:

Office of the Revenue Commissioners

Dublin City Centre/North City Revenue

District 9/10 Upper O’Connell Street

Dublin 1

Ireland

The Irish Revenue Commissioners may require a non-established business to provide security in order to register for VAT.

Tax representatives. Tax representatives are not required in Ireland. Irish VAT legislation does not currently impose a requirement on non-established traders to appoint a tax representative.

Reverse charge. If a non-established business supplies services to an Irish taxable person, the taxable person may be required to account for the VAT due under reverse-charge accounting. This means that the taxable person charges itself VAT. The self-assessed VAT may be deducted as input tax (that is, VAT on allowable purchases) depending on the taxable person’s VAT recovery status. This measure applies only if the place of supply of the services is in Ireland.

Domestic reverse charge. The application of the domestic reverse charge in Ireland is limited to services connected with the following activities:

• Construction services subject to relevant contractors’ tax (RCT) in Ireland

• Certain property transactions

• Greenhouse gas emissions allowances

• Scrap metal dealers

• Wholesale supplies of electricity and gas

• Supply of electricity and gas certificates

Digital economy. Specific VAT rules apply to cross-border supplies of goods and services sold via the internet (e-commerce) in all EU Member States with effect from 1 July 2021. These new rules apply to all direct sales to nontaxable persons (in practice these are mostly private individuals), but we refer to these rules as e-commerce VAT rules because most of these transactions are conducted via the internet. In general, the place of supply is in the country of consumption, i.e., where the goods are shipped to or where the buyer of the goods or services resides, subject to any “use and enjoyment” provisions that may override this rule (see Section B, Effective use and enjoyment subsection above). Therefore:

• For supplies of services made by a nonresident supplier to a business customer (B2B), the business customer is responsible for accounting for the VAT due, using the reverse charge.

• For supplies of goods made by a nonresident supplier to a business customer (B2B), where the goods are transported from another EU Member State, the business purchasing the goods is responsible for accounting for the VAT due, as an intra-Community acquisition. If the goods come from outside the EU, the purchaser may have to report an importation of goods.

• For supplies of goods or services made by a nonresident supplier to a final consumer (B2C), the supplier is generally responsible for charging and accounting for the VAT due at the rate applicable in the customer’s country (unless the supplier’s sales fall beneath the distance selling threshold of EUR10,000 with effect from 1 July 2021). This VAT can be reported using a single VAT registration, using a “One-Stop-Shop” mechanism.

For more details about intra-EU distance sales, please see the chapter on the EU.

Effective 1 July 2021, an e-commerce supplier may have a choice of how to account for VAT on its B2C supplies.

Local VAT registration. A nonresident supplier may choose to register for VAT in each Member State and account for VAT on all supplies made and recover input tax in accordance with local rules (see the Non-established businesses subsection above).

In Ireland, where a supplier wishes to register for VAT purposes, a VAT registration application can be made via a TR2/TR2(FT) form. See the Registration procedures subsection below for further detail.

One-Stop Shop. Effective 1 July 2021, a supplier can choose to account for the VAT due under the EU One-Stop Shop (OSS), which can be used for intra-EU cross-border supplies of goods

and all cross-border supplies of services made to final consumers in the EU. Unlike the previous Mini One-Stop-Shop (MOSS) scheme that applied until 30 June 2021, the OSS is not limited to cross-border supplies of electronic services, telecommunication services and broadcasting ser vices.

The OSS is an electronic portal that allows businesses to:

• Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for B2C supplies of services

• Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return

The OSS can be used by businesses established in the EU and outside the EU. If a supplier or a deemed supplier decides to register for the OSS, it must declare and pay VAT for all relevant supplies (goods as well as services) under the OSS.

Where Ireland is chosen as a supplier’s Member State of Identification, the supplier will need to register for OSS and submit returns on a quarterly basis electronically through the tax authorities’ online portal, Revenue Online Service (ROS). The due date for such returns is the last day of the month following the quarterly tax period in question (i.e., for the January-March return, the OSS return would be due by 30 April).

For more details about the operation of the OSS, please see the chapter on the EU.

Import One-Stop Shop. Effective 1 July 2021, the Import One-Stop-Shop (IOSS) scheme applies for B2C distance sales of goods from outside the EU.

Effective 1 July 2021, VAT is due on all commercial goods imported into the EU regardless of their value. The actual supply is subject to VAT in the country where the goods are imported (the country of destination). The IOSS facilitates the declaration and payment of VAT due on the sale of low-value goods (i.e., consignments valued at less than EUR150 per consignment). It allows suppliers selling low-value goods dispatched or transported from a non-EU country to customers in the EU to collect, declare and pay the VAT due. If the IOSS is used, the importation into the EU is exempt from VAT.

In Ireland there are no additional specific local rules that apply.

For more details about the IOSS, please see the chapter on the EU.

The use of the IOSS special scheme is not mandatory. If VAT is not collected via the IOSS scheme, the importation of goods into the EU is subject to import VAT in the country of final destination and the Member State can decide freely who is liable to pay the import VAT, which could be the customer or the seller (or an electronic interface).

Postal Services and Couriers Scheme. If the IOSS is not used and the customer is liable for the import VAT due on the supply (and importation) of consignments with a small intrinsic value (i.e., less than EUR150), the VAT can be collected using the special scheme for postal services and couriers.

In Ireland there are no additional specific local rules that apply.

For more details about the special scheme for postal services and couriers, please see the chapter on the EU.

Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021, taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underly ing” supplier to the final consumer is split into two deemed supplies:

• A supply from the supplier to the facilitator (deemed B2B supply).

•

A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes.

This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceed ing EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt (with credit) and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local shipments within one Member State as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.

In Ireland there are no additional specific local rules that apply.

For more details about the rules for online marketplaces, please see the chapter on the EU.

Vouchers. Effective 1 January 2019, vouchers (for example prepaid telecom cards, gift cards, price discount coupons, etc., for the purchase of goods or services) will fall into two categories: single-purpose vouchers (SPV) and multipurpose vouchers (MPV).

An SPV is defined as a voucher where the place of supply of the goods/services to which the voucher relates and the VAT due on those goods or services is known at the time of the issue of the voucher (e.g., a voucher issued for specific use for hotel accommodation in Ireland).

An MPV is defined as a voucher other than an SPV. It includes vouchers that can be redeemed for goods/services that are subject to different VAT rates (e.g., a voucher that can be redeemed in multiple stores in a shopping center for items at a variety of VAT rates). VAT must be account ed for at the point of issue of an SPV (rather than at the point of redemption, which is the current practice) and at the time of redemption of an MPV.

Also, from 1 January 2019, persons that sell prepaid phone cards will no longer be eligible to recover VAT when these cards are used outside the European Union, which is linked to the voucher changes.

Registration procedures. Taxable persons must apply for VAT registration through the submission of form TR1 or TR2. The application for registration must be made online, except in exceptional services. Applicants whose business is not established in Ireland should submit a paper version of form TR1(FT) or TR2(FT). A two-tier system exists such that companies can apply for a domestic-only registration or a registration that includes supplies made to or received from other EU Member States, an intra-EU registration. Obtaining VAT registration typically should take four to six weeks. Registration is effective from a date agreed by the local tax district and the taxable person.

Deregistration. An accountable person that ceases to be eligible for VAT registration must cancel its registration. An accountable person may also request cancellation of its registration if the level of its taxable turnover falls below the annual registration threshold or if the accountable person previously opted for registration and no longer wishes to be registered.

Changes to VAT registration details. If any of the information supplied to the Revenue Commissioners changes, the taxable person must notify their Revenue Commissioner office within 30 days of the change. Such changes can be notified by paper or online.

D. Rates

The term “taxable supplies” refers to supplies of goods and services that are liable for VAT at any rate, including supplies made at the zero rate.

The VAT rates are:

• Standard rate: 23% %

• Reduced rates: 9%, 13.5%

• Zero-rate: 0%

The standard rate of VAT applies to all supplies of goods or services, unless a specific provision allows a reduced rate, the zero rate or an exemption.

Examples of goods and services taxable at 0%

• Books (hard copy)

• Most foodstuffs (excluding confectionery)

• Oral medicine

• Exports

• Children’s clothing and footwear

• Goods and services supplied to frequent exporters under the “VAT 56 Scheme”

• Supply of COVID-19 vaccines and in-vitro diagnostic medical devices and services closely linked to them (This is a temporary relief, in place from 12 December 2020 to 31 December 2021.)

Due to COVID-19, the VAT rate for transactions such as restaurant and catering services; certain printed matter, promotion of and admission to shows, exhibitions and cultural facilities; hotel and holiday accommodation; and hairdressing services changed from 13.5% to 9% with effect from 1 November 2020 to 31 August 2022.

Examples of goods and services taxable at 9%

• Newspapers and magazines

• Electronic newspapers, magazines and e-books

• Admission to sporting facilities

• Hairdressing services

• Hospitality and tourism

• Electricity

Examples of goods and services taxable at 13.5%

• Restaurant and catering services

• Repair, cleaning and maintenance services

• Developed immovable property

• Building services

The term “exempt supplies” refers to supplies of goods and services that are not liable for VAT and that do not qualify for input tax deduction. However, as regards the latter, an exception applies to certain exempt services supplied outside the EU for which VAT recovery does exist.

Examples of exempt supplies of goods and services

• Postal services

• Finance

• Insurance

• Leasing of immovable property (unless option to tax exercised by landlord)

Option to tax for exempt supplies. A landlord can generally opt to tax a letting (with certain excep tions such as residential property and lettings to connected parties with less than 90% VAT recovery). A vendor of immovable goods and the purchaser of those immovable goods can jointly agree to tax the sales.

E. Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The following is a general summary of the rules for determining when VAT is due:

•

For supplies made to nontaxable persons, the due date is the date on which the supply is com pleted.

• For supplies made to taxable persons, the due date is the date on which the invoice is issued or the date on which the invoice should have been issued, whichever is earlier.

Deposits and prepayments. A prepayment is deemed to be consideration for a taxable supply, up to the value of the prepayment. The invoice for a prepayment must be issued within 15 days after the end of the month in which the prepayment is received.

A supplier that accounts for VAT on an invoice basis must account for VAT on a prepayment from a VAT-registered customer when the invoice is issued or when it should have been issued (that is, within 15 days after the end of the month in which the prepayment is received), whichever is earlier.

A supplier that accounts for VAT on a cash receipts basis must account for VAT on a prepayment from a VAT-registered customer when the payment is received.

The due date for a prepayment received from a nontaxable person is when the payment is received.

Where there is a supply of goods, services or a prepayment, an invoice should be issued by 15 days after the end of the month in which the supply or prepayment is made.

Continuous supplies of services. The time of supply for continuously supplied services is the date of the tax invoice or when payment or prepayment is received.

Goods sent on approval for sale or return. There are no special time of supply rules in Ireland in relation to goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).

Reverse-charge services. The time of supply for reverse-charge services is either the date on which the service performed is completed or the date of the tax invoice, whichever is earlier.

Leased assets. A finance and operating lease are treated in the same fashion in Ireland. Basically, both are treated as a supply of a service subject to VAT. The time of supply in relation to the lease of assets is as outlined above for a continuous supply of services. VAT becomes due where an invoice issues in respect of the periodic leasing charges or payment is received in relation to the leased assets received.

The time of supply for assets sold under hire purchase agreements is when the goods have been handed over to the purchaser.

Imported goods. The due date for accounting for VAT on imported goods is the date of importa tion or the date on which the goods leave a duty suspension regime.

Intra-Community acquisitions. The due date for accounting for VAT on an intra-Community acquisition of goods is the 15th day of the month following the month in which the goods arrive or the month in which the invoice is received, whichever is earlier.

Intra-Community supplies of goods. The time of supply for intra-Community supplies of goods is either the date of shipment/delivery or the date of the tax invoice, whichever is earlier.

Distance sales. There are no special time of supply rules in Ireland for supplies of distance sales. As such, the general time of supply rules apply (as outlined above).

F. Recovery of VAT by taxable persons

A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. An accountable person generally recovers input tax by deducting it from output tax, which is VAT charged on supplies made.

C OF

The time limit for a taxable person to reclaim input tax in Ireland is four years. Input tax includes VAT charged on goods and services supplied within Ireland, VAT paid on imports of goods and VAT that is self-assessed on the intra-Community acquisition of goods and reverse-charge ser vices.

A valid tax invoice or customs document must generally accompany a claim for input tax.

Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not made for business purposes, such as goods acquired for private use. If expenditure relates to business and private use, the input tax must be apportioned, and the amount related to business activities may be deducted.

In addition, input tax may not be deducted for some items of business expenditure, including the following items:

• The provision of food, drink and accommodation except for accommodation incurred in con nection with attendance at a qualifying conference. A qualifying conference is a conference undertaken in the course or furtherance of business, organized to cater to 50 or more delegates. VAT may be claimed for a maximum period beginning with the night before the conference and ending on the date when the conference ends.

• Other personal services for taxable persons or their agents or employees.

• Entertainment expenses incurred by the taxable persons or their agents or employees.

• The purchase, hire or importation of passenger motor vehicles. However, 20% of VAT is recov erable on the purchase, hire or importation of certain cars that have a low level of carbon dioxide emissions CO2 emissions of less than 156g/km) and that are used primarily for business purposes.

• The purchase of petrol (gasoline). However, diesel is deductible.

The following lists provide some examples of items of expenditure for which input tax is not deductible and examples of items for which input tax is deductible.

Examples of items for which input tax is nondeductible

• Hotel accommodation

• Food and drink

• Petrol

• Business entertainment

Examples of items for which input tax is deductible (if related to a taxable business use)

• Car maintenance costs

• Partial VAT recovery on lease, purchase and hire of most passenger cars subject to certain conditions

• Attendance at qualifying conferences and seminars

• Lease, purchase, hire and maintenance of vans and trucks

• Diesel for business use

• Business use of mobile telephones

• Parking

• Gas and electricity

Partial exemption. Input tax directly related to making exempt supplies is not generally recover able. However, input tax related to making certain exempt supplies to non-EU customers (qualifying activities) is deductible. If an accountable person makes both exempt supplies and taxable supplies, it may not recover all the input tax incurred on goods or services acquired for both purposes.

Input tax that directly relates to making exempt supplies is not recoverable. Input tax that direct ly relates to making taxable supplies is recoverable in full. For these purposes, the term “taxable

supplies” includes zero-rated supplies and qualifying activities. Input tax that relates to taxable supplies and to exempt supplies is considered to have a dual use and must be apportioned between taxable supplies and exempt supplies. The percentage of dual-use input tax that is attrib utable to making taxable supplies is recoverable. The recoverable percentage is rounded up to the nearest whole number. For example, a recovery percentage of 79.2% would be rounded up to 80%, where a turnover based method is applied.

An Irish accountable person may use any calculation method to determine the recoverable per centage of dual-use input tax if the chosen method satisfies the following conditions:

• It results in a proportion of tax deductible that correctly reflects the extent to which dual-use inputs are used for the purposes of the person’s deductible supplies or activities.

• It has due regard to the range of the accountable person’s total supplies and activities.

• Examples of possible apportionment methods include calculations based on the following:

• The ratio of turnover from taxable and qualifying activities to turnover from exempt activities

• The ratio of taxable transactions to exempt transactions

• The number of people involved in various activities

Approval from the tax authorities is not required to use the partial exemption standard method or special methods in Ireland. The default position is that the turnover method should apply. However, an entity, as outlined above, may choose an alternative method that produces a VAT recovery percentage that best reflects proportion of tax deductible to which dual-use inputs are used. It is not a requirement to seek preapproval from the Revenue Commissioners to use such a method. However, should an entity change its methodology, it is advisable to seek approval.

The Revenue Commissioners may require that a partially exempt accountable person uses a dif ferent calculation method if, in their view, the method adopted does not adequately reflect how input tax was used in the business or the activities undertaken.

Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired and first used. The amount of input tax recovered depends on the accountable person’s partial exemption recovery position in the VAT year of acquisition and first use. In Ireland, the only item defined as a capital good is immovable property. In Ireland, the capital goods adjustment does not apply to any services.

Refunds. If the amount of input tax recoverable in a period exceeds the amount of output tax payable in that period, the accountable person is due a refund of the excess input tax credit. An accountable person may claim a refund of the credit by submitting the VAT return for the period. If an accountable person normally receives refunds of VAT, it may request permission to submit monthly returns to improve cash flow.

Pre-registration costs. VAT paid on costs incurred before commencement of trading is generally recoverable. Taxable persons should seek to register for VAT from a date prior to when the costs were incurred and recover the VAT through its periodic VAT returns.

Bad debts. The process of accounting for VAT on bad debts depends on whether the VAT was already paid to the supplier or if it was deducted but not yet paid.

In cases where VAT was already paid, the bad debt is allowable as a deduction for VAT if the following conditions are satisfied:

• The VAT paid was properly paid.

• The taxable person has taken all reasonable steps to recover the debt.

• The bad debt has been written off in the financial accounts of the taxable person.

• The person from whom the debt is due is not connected with the taxable person.

C OF

Where a person deducts VAT in a taxable period but has not, within six months of the end of that taxable period, paid the supplier for the goods or services, then the amount of VAT deductible will be reduced by the amount of VAT relating to the unpaid consideration, i.e., the VAT deduct ed relating to the unpaid consideration must be repaid to Revenue. A readjustment is provided for in the event of subsequent payment or part payment for the goods or services. The corre sponding (re)adjustments should be declared on the corresponding periodic VAT return(s).

Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Ireland.

G. Recovery of VAT by non-established businesses

The Revenue Commissioners refund VAT incurred by businesses that are neither established nor registered for VAT in Ireland. Non-established businesses may claim Irish VAT to the same extent as a VAT-registered business, provided the general VAT deductibility criteria is met.

EU businesses. For businesses established in the EU, applications for refunds are made under the terms of the EU Directive 2008/9/EC. The VAT refund procedure under the EU Directive 2008/9 may be used only if the business did not perform any taxable supplies in Ireland during the refund period (excluding supplies covered by the reverse charge). For full details please see the chapter on the EU.

Please find below specific rules for Ireland:

• For Irish VAT recovery claims from EU-based entities, in certain circumstances, interest is paid on repayments at a rate of 0.011% per day if the payment falls outside specific legislative time limits.

Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For full details please see the chapter on the EU.

Ireland applies the principle of reciprocity, that is, the country where the claimant is established must also provide VAT refunds to Irish businesses. In practice, there are no countries known that are excluded.

Please find below specific rules for Ireland:

• The deadline for refund claims is 30 June of the year following the year in which the tax was incurred.

• The claim must be for a period of not less than a calendar quarter, unless it is for the final part of a year, and the period may not be longer than a calendar year. For claims covering a period of between three months and one year, the minimum claim amount is EUR400. The repayment is made by a check issued in EUR or by direct deposit into a bank account.

• Applications for refunds of Irish VAT by non-EU claimants may be sent to the following address:

VAT (Unregistered) Repayments

Office of the Revenue Commissioners

3rd Floor River House Charlotte’s Quay Limerick Ireland

• Claims are normally paid within three to six months after submission of the claim. For Irish VAT recovery claims by non-EU entities, interest is not paid by the Irish tax authorities on late repayments.

Late payment interest. In Ireland, interest is not paid on late refunds to non-established busi nesses (for both EU and non-EU non-established businesses).

H. Invoicing

VAT invoices. An Irish accountable person must issue a VAT invoice for taxable supplies made to taxable customers, exempt persons, government departments, local authorities and bodies estab lished by statute. An Irish accountable person must also issue an invoice with respect to intraCommunity supplies to businesses in other EU Member States and to sales to private individuals in other EU Member States under distance selling arrangements. A VAT invoice must be issued within 15 days after the end of the month in which either the goods or services were supplied or an advance payment was received.

A VAT invoice is necessary to support a claim for input tax deduction or an Irish VAT refund application under the EU 13th Directive for non-EU businesses or under the VAT refund proce dure applicable to EU businesses.

Credit notes. A VAT credit note must be used if the VAT payable on a supply is reduced because of a subsequent allowance or discount unless the supplier and taxable customer agree that the VAT need not be adjusted. The credit note must be cross-referenced to the original VAT invoice and contain the same information.

Electronic invoicing. Irish VAT law permits electronic invoicing in line with EU Directive 2010/ 45/EU (see the chapter on the EU).

An accountable person may choose to issue an invoice in electronic format. The issue of elec tronic invoices is subject to the following conditions:

• There is prior agreement between the issuer and the recipient in relation to the issue and accep tance of electronic invoices.

• The electronic system must be able to produce, retain and store invoices in such form and containing such particulars as are required for VAT purposes.

• The system must be able to reproduce in paper or electronic format any electronic record or message required to be produced, retained or stored.

• The issuer and recipient of an electronic invoice have an obligation to ensure the authenticity of origin, the integrity of content and a reliable audit trail between the invoice and the supply.

Simplified VAT invoices. A simplified invoice, credit note, settlement voucher or debit note may be issued if the following conditions are met:

• The amount of the invoice is not greater than EUR100 Or

• When commercial, technical or administrative practices in a particular business sector make it difficult to comply with general invoicing requirements

A simplified invoice cannot be used in relation to an intra-Community supply of goods and or services.

Self-billing. Self-billing is allowed in Ireland. For self-billing to apply, the following conditions should be met:

• There is prior agreement with the supplier that the customer may draw up and issue the invoice.

• All conditions relating to the content or issue of the invoice are met by the customer.

• Agreed procedures are in place for acceptance by the supplier of the validity of the invoice.

• The invoice is endorsed with “self-billing.”

An invoice issued under these arrangements is regarded as having been issued when the supplier accepts it in accordance with the procedures in place.

Proof of exports and intra-Community supplies. VAT is chargeable at a zero rate on the supply of exported goods or on the intra-Community supply of goods (see the chapter on the EU). However, to qualify for a zero rate, exports and intra-Community supplies must be supported by evidence that confirms the goods have left Ireland. Acceptable proof includes the following documentation:

• For an export, a copy of the export document officially validated by customs showing the sup plier as the exporter, together with shipping or air freight documents and copies of commercial documentation (for example, orders, copy invoices, dispatch notes and delivery notes).

• For an intra-Community supply, a range of commercial documentation, including purchase orders, transport documentation, proof of payments received from abroad and contracts. The EU VAT registration number of the customer must also be quoted on the sales invoice.

Foreign currency invoices. A VAT invoice may be issued in a foreign currency, but the actual VAT amount must be converted to the domestic currency, which is the euro (EUR), and included on all VAT invoices issued. The invoice amounts must be converted using the latest selling rate recorded by the Irish Central Bank at the time of supply.

It is possible to agree on a different exchange rate method with the Irish VAT authorities. If an alternative method is used, the accountable person must use it for all foreign currency transac tions.

Supplies to nontaxable persons. For domestic B2C sales, there are no requirements to issue any documentation (i.e., no need to issue full VAT invoices). For distance sales supplies, full VAT invoices must be issued.

Transactions between related parties. For a transaction between related parties, the value for VAT purposes is calculated as follows: open market value may be applied to transaction between related parties should the Revenue Commissioners consider it necessary to ensure the correct collection of tax is applied such as instances where there is no entitlement by a related party to deduct VAT.

Records. The Irish Revenue Commissioner provides that a VAT-registered entity must keep full and true records of all business transactions that affect their liability to VAT, including business books and records, invoices, credit notes, debit notes, receipts, accounts, cash register tally rolls, vouchers, VIES records, Intrastat returns, stamped copies of single administrative documents and bank statements.

Paper records should be kept in Ireland, but electronic records may be stored outside of Ireland (see the subsection below Electronic archiving for more detail).

Record retention period. A VAT-registered entity should retain all books, records and documents relevant to its business for a period of six years.

A VAT registered entity should obtain written permission from the relevant Revenue office to be permitted retention of documents for a shorter period.

Electronic archiving. Should a VAT-registered entity issue invoices in paper form, it should be retained in paper form. Paper records must be stored within Ireland. Exceptions to this require Revenue agreement and are subject to conditions.

Electronic records must be recorded and stored in accordance with the electronic invoicing rules.

It is not required to retain the paper originals of any third-party record where an electronic copy of the original record is generated, recorded and stored, and the person is able to certify the following:

• The stored records were not damaged or amended.

• Proper security procedures were in place to prevent tampering.

• Programs are in place that will reproduce accurately the documents that are stored.

• A proper systems audit takes place annually to ensure that the instructions on the use of the system have been followed correctly and are in accordance with operational requirements.

• Copies of records must be accessible to Revenue in the way and format they may request.

I. Returns and payment

Periodic returns. Irish VAT returns are generally submitted electronically on a bimonthly basis. Returns must be made online and by the 23rd day of the month following the return period.

However, the following taxable periods may be authorized by the Revenue Commissioners:

• Monthly basis if you are in a constant repayment position

• Annual return if you are making equal installments by direct debit

• Four-monthly returns if your annual VAT liability is between EUR3,001 and EUR14,400

• Six-monthly returns if your annual liability is EUR3,000 or less

Periodic payments. Full payment of the VAT due must be made by the VAT return deadline, i.e., by the 23rd day of the month following the end of the return period. The VAT should be submit ted electronically by direct debit payment linked to a taxable person’s account on Revenue’s online platform ROS.

Electronic filing. Electronic filing is mandatory in Ireland for all taxable persons, using the ROS section in www.revenue.ie.

Payments on account. Payments on account are not required in Ireland.

Special schemes. Farmers. Farmers who are not VAT registered can charge a flat rate addition of 5.5% to VAT-registered purchasers on supplies including, for example, livestock and greyhounds.

Frequent exporters. A business that exports goods to persons outside the EU or to taxable persons in other EU Member States does not charge VAT on these transactions. However, it pays VAT on the goods and services it purchases locally or acquires from other EU Member States and on imports. Consequently, a business that predominantly trades with other countries would generally be in a net VAT repayment position for each period. This may have a negative impact on its cash flow position.

To help ease cash flow for businesses involved in international trade, exporters benefit from a special treatment for purchases. This provision is commonly known as the “VAT 56 Scheme.” For these purposes, a qualifying exporter is an accountable person that derives at least 75% of its turnover from exports of goods from Ireland and from intra-Community supplies of goods from Ireland to persons registered for VAT in other EU Member States. Qualifying exporters may apply for certification of their entitlement to relief. Copies of the certification must be provided to suppliers that are required to supply most goods and services to qualifying exporters at the zero-rate.

The VAT 56 zero rating applies to most domestic purchases of goods and services, imports and intra-Community acquisitions. The zero-rating does not apply to the supply or hire of passenger cars, petrol (gasoline) for cars, food, drink, accommodation, nonbusiness purchases or any other expenses for which the input tax is not deductible.

Cash accounting. Some accountable persons are authorized to account for VAT on the basis of payments received rather than on the basis of invoices issued. This system is called “cash accounting.” A person may avail of this if more than 90% of their turnover is derived from sales to unregistered persons or should the value from their annual turnover be under EUR2 million. For accountable persons using cash accounting, the liability to account for VAT arises on the date

when payment is received for the supply. However, this does not change the basic tax point for the supply itself. The VAT rate applicable to a supply of goods or services is the rate in force on the date of the supply, not the rate in force on the date when payment is received.

Annual accounting. Some accountable persons are permitted to submit VAT returns on an annual basis. This facility is granted at the discretion of the Irish VAT authorities. Accountable persons that submit annual returns must also complete the annual return of trading details.

An accountable person that is permitted to use the annual accounting may align its annual VAT return date with its commercial accounting year.

An accountable person that is permitted to submit annual returns must make monthly VAT pay ments by direct debit throughout the year. Interest may be chargeable if the sum of the monthly payments made is less than 80% of the total VAT payable for the year.

Charities. Charities can benefit from a VAT compensation scheme to reduce their VAT burden and partially compensate for VAT incurred in the daily running of the charity. The scheme is capped at EUR5 million annually, and charities are entitled to claim a refund of a proportion of their VAT costs based on the level of nonpublic funding they receive. Claims are paid on a pro rata base if the total amount of claims exceeds EUR5 million. To qualify for the scheme, a charity at the date and time that the qualifying expenditure was incurred should be registered with the Revenue Commissioners and hold a charitable tax exemption and be registered with the Charities Regulatory authority.

Annual returns. All accountable persons must submit an annual return (known as an “Annual Return of Trading Details”), which outlines sales and purchases for the year, broken down by VAT rate. It is a statistical return. Consequently, no VAT liability is attached to such return. The return is due to be filed 23 days following the financial year-end of the taxable person, for example, a taxable person with a financial year-end of 31 December 2021 is due to file the return by 23 January 2022.

Supplementary filings. Intrastat. An accountable person that trades in goods with other EU coun tries must complete statistical reports, known as Intrastat, if the value of its intra-Community sales or purchases of goods exceeds certain thresholds. Separate reports are required for intraCommunity acquisitions (Intrastat Arrivals) and intra-Community supplies (Intrastat Dispatches).

The threshold for Intrastat Arrivals for 2022 is EUR500,000. The threshold for Intrastat Dispatches for 2022 is EUR635,000.

The Intrastat return period is monthly. The submission deadline is the 23rd business day of the month following the return period. Intrastat returns must be filed electronically through the Revenue Commissioners Online System (ROS). Returns must be completed in EUR.

EU Sales Lists. If an Irish accountable person makes intra-Community supplies of goods and/or services, it must submit an EU Sales List (ESL). No threshold applies to ESLs. If no intraCommunity supplies are made in a period, a “nil” statement must be submitted for that period.

ESLs are also known as “VAT Information Exchange System (VIES) statement” in Ireland.

ESLs are submitted quarterly if the quarterly amount of intra-Community supplies of goods does not exceed EUR50,000. Otherwise, ESLs are submitted monthly. An accountable person that is entitled to submit ESLs on a quarterly basis may apply to submit ESLs monthly if it is more convenient to do so. The submission deadline is the 23rd day of the month following the end of the return period, and ESLs must be filed electronically.

Correcting errors in previous returns. There are different mechanisms to correct errors in VAT returns including the following:

• Supplementary VAT returns

• Amended VAT returns

• Self-corrections in a current return period (only where the VAT due is less than EUR6,000)

• Disclosure regimes

The applicable method is dependent on various factors, such as value of the VAT error, the dates when the error occurred and whether the Revenue Commissioners have intervened prior to the taxable person correcting the error.

To mitigate penalties, a disclosure can be made to the Revenue Commissioners where tax is underpaid. The penalty can be reduced to as low as 3%, depending on the specific circumstanc es of the taxable person and the disclosure is made to the Revenue Commissioners in advance of an audit notification.

Digital tax administration. There are no transactional reporting requirements in Ireland.

J. Penalties

Penalties for late registration. A penalty of EUR4,000 can be assessed for a failure to register for VAT.

Penalties for late payment and filings. The basic penalty for the late submission of a VAT return is EUR4,000 per return.

Interest may also be levied on the amount of tax due at the rate of 0.0274% per day.

The penalty for a late or incorrect submission of an Intrastat return is EUR1,265 plus EUR60 per day that the return is outstanding.

The penalty for a late or incorrect submission of an ESL is EUR4,000.

Penalties for errors. If the Irish VAT authorities determine that an error was made as a result of the taxable person acting carelessly or deliberately defaulting, penalties may be imposed based on the amount of VAT underpaid or overclaimed. Such penalties can be between 3% and 100% of the VAT liability at issue, depending on the circumstances such as if a disclosure of the error is made to Revenue.

For the late notification or failure to notify the tax authorities of any changes to a taxable person’s registration details, there are in practice no penalties that apply. For further details please see the subsection above Changes to VAT registration details.

Penalties for fraud. The penalty for fraud is 100% of the VAT liability.

Personal liability for company officers. Company directors/officers are not held personally liable for errors and omissions in VAT declarations and reporting, provided fraudulent activities are not included. For fraudulent activities, this would be very case-specific and a range of penalties and possible criminal charges may apply.

Statute of limitations. The statute of limitations in Ireland is four years. Generally, the time limit for Irish tax authorities to assess any VAT due is four years. However, in certain circumstances, the authorities can go back further than this period if it is deemed that a prior return did not contain a full and true disclosure of relevant facts.