VALUE ADDED TAX

VALUE ADDED TAX

MALONE & CO.

Our firm specialises in the area of VAT consultancy. We have wide-ranging experience of dealings with both domestic VAT issues and the international aspects of VAT on goods and services.

VAT is a consumption tax assessed on the value added to a product or service. It is an EU-wide tax, being operated with only minor variations by all countries within the EU. Knowledge of how VAT operates on transactions in other member states and outside of the EU is of growing importance to businesses in an increasingly global market place.

It applies to most goods and services that are bought or sold in the EU. Goods and services that are exported are normally not subject to VAT. However to keep the system fair for EU producers, VAT normally applies to the importation of goods and services.

The taxable person is obliged to charge and account for VAT on a periodic basis, normally bi-monthly, to the revenue commissioners. They can deduct VAT suffered on purchase of goods and services which have been used to make their own taxable supplies. VAT is charged at different rates depending on the type of business you are running, where the supply is made and whether the buyer of the good or service is a private individual or another business.

The current rates of vat and vat registration thresholds in Ireland are as follows:

  • 23% is the standard rate of VAT and all goods and services that do not fall into the reduced rate categories are charged at this rate.
  • 13.5% is a reduced rate of VAT for certain specified services such as electricity, building and building services, agricultural contracting services, short-term car hire, cleaning and maintenance services.
  • 4.8% is a reduced rate of VAT specifically for agriculture. It applies to livestock (excluding chickens), greyhounds and the hire of horses.
  • 0% (Zero) VAT rating includes all exports, tea, coffee, milk, bread, books, children’s clothes and shoes, oral medicine for humans and animals, vegetable seeds and fruit trees, fertilisers, large animal feed, disability aids such as wheelchairs, crutches and hearing aids.
  • Exempt from VAT

The supply of most financial, medical or educational services are exempt from VAT. You may also not pay VAT for certain live theatrical and musical performances (except those where food or drink is served during all or part of the performance). However you are not entitled to register for VAT in respect of your supply of exempt goods and services, unless you also make taxable supplies. If you make an exempt supply of goods or services, you are not entitled to reclaim VAT incurred on expenditure in connection with the exempt supply.

  • Difference between exemption and zero-rating

If a business person supplies taxable goods or services, including zero-rated ones, they can claim VAT back from the government on their taxable business purchases. However, if someone only supplies exempt goods or services, they cannot reclaim VAT.

Should you require clarification on the applicable rate to any specific supply of good or service in the Republic of Ireland please contact our office as we have prepared an extensive listing of VAT ratings in Ireland which we can provide to you.

REGISTRATION

Registration is obligatory if turnover exceeds the following limits:

Business supplying services €37,500 per annum
Business supplying goods €75,000 per annum
Intra community acquisitions €41,000 in a 12 month period

Also certain foreign traders supplying taxable services in Ireland or selling goods from stocks held in Ireland must register for Irish VAT regardless of the volume of sales.

There are also specific rules for distance sales to Ireland and for premises providers who allow non-established vendors to operate from their premises.

VAT ON PROPERTY

One of the most complicated areas in VAT legislation, and Irish tax legislation as a whole, is the operation of VAT on property transactions. We can advise you on the VAT issues regarding any property transaction such as:

  • Determining if VAT applies to your property transaction(s).
  • Advice on and calculation of your liability to VAT when selling property or granting leases.
  • Advice on surrendering or assigning/selling leases.
  • How VAT is operated on subsequent leases (granted following the early surrender of a previous lease).
  • Advice on all Revenue concessions and anti-avoidance measures that apply to property transactions.
  • How VAT on property applies in a VAT Group situation
  • The steps which should be taken in structuring property deals.