Recovery of VAT by non-established businesses Yes, subject to certain conditions
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 EU chapter)
• 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-Community supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Community trade in goods. For an overview of Quick Fixes rules, see the EU chapter. For documentary requirements see Section H. Invoicing, subsection Proof of exports and intra-Community supplies.
The four “VAT Quick Fixes” in relation to intra-EU trade took effect 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 non-taxation 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 EU countries.
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 services in Ireland, the place of supply is Ireland. Supply of such services by an operator or broadcaster established in Ireland to a nontaxable person outside the EU who uses and enjoys the service in Ireland is treated for Irish VAT purposes as the place of supply is Ireland.
Transfer of a going concern. Normally the sale of the assets of a VAT-registered or VAT-registrable business will be subject to VAT at the appropriate rate. However, a transfer of a business as a going concern (TOGC) may be outside the scope of the tax under certain conditions. A TOGC is
the sale of a business or part of a business capable of separate operation including assets. Where the sale meets conditions, the supply is treated as outside the scope of VAT. In Ireland, a TOGC, known as a transfer of business relief (TOB), is treated as outside the scope of VAT where the following conditions are met (note this is not an exhaustive list):
• 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.
Note that each transaction should be examined on a case-by-case basis to determine whether it comes within the provisions of a TOB.
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; and in instances where the related party is not entitled to deduct all or part of the VAT charged.
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:
• EUR42,500 for persons supplying services
• EUR85,000 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 companies 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
• 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 working 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, see the EU chapter.
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 and customs duties should not apply. It is important to note, however, that under the IOSS there is no longer any exemption from VAT for low-value goods (value less than EUR22).
In Ireland there are no additional specific local rules that apply.
For more details about the IOSS, see the EU chapter.
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, see the EU chapter.
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 “underlying” 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 exceeding 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, see the EU chapter.
Vouchers. Effective 1 January 2019, vouchers, e.g., prepaid telecom cards, gift cards, price discount coupons, 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 accounted 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 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 six to eight 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, e-books and audio books
• Most foodstuffs (excluding most drinks, confectionery)
• Oral medicine
• Exports
• Children’s clothing and footwear
• Goods and services supplied to frequent exporters under the “VAT 56 Scheme”
• Newspaper publications (both paper and digital format)
Examples of goods and services taxable at 9%
• Magazines
• Electronic magazines
• Admission to sporting facilities
• Hairdressing services
Supply and installation of heat pumps
• Gas and electricity (extended until 30 April 2025)
Examples of goods and services taxable at 13.5%
• Gas and electricity (with effect from 1 May 2025)
• 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
• Financial services
• 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 exceptions 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 completed.
• 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.
Examples of possible apportionment methods, which have been agreed with Irish Revenue and where turnover is not appropriate, include the following:
• The ratio of taxable transactions to exempt transactions
• The number of people involved in various activities
Approval from the tax authorities is technically not required where the turnover method is applied. However, an entity, as outlined above, may choose an alternative method, other than turnover that produces a VAT recovery percentage that best reflects its proportion of tax deductible to which dual-use inputs are used. While it is not a requirement to seek preapproval from the Revenue Commissioners, where a methodology other than turnover is being used, it is strongly recommended.
The Revenue Commissioners may require that a partially exempt accountable person uses a different 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 developed 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.
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 deducted 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 corresponding (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
Input tax incurred by non-established businesses that are not registered for VAT in Ireland is recoverable. 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, see the EU chapter.
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 see the EU chapter.
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.
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 this 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 businesses (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 established 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 procedure applicable to EU businesses.
• 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 submitted 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. This is done by 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 4.8% (reduced from 5% with effect from 1 January 2024) 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 must apply for certification of their entitlement to the relief from Irish Revenue. Copies of the certification should then be provided to suppliers, which allows them 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.