Guide to Value Added Tax 10th Edition

Issued by Revenue January 2003

www.revenue.ie

Foreword
The purpose of this Guide is to explain in general terms the principal features of the Irish VAT system and to update traders on all new developments and changes to that system since publication of the last Guide in July, 1999. The latest version of the Guide aims to give a broad overview of the VAT system and focuses on those issues which are likely to be of interest to the majority of VAT-registered traders and to traders who are registering for VAT for the first time. Issues of special interest are dealt with in detail in a range of VAT Information Leaflets and Statements of Practice which are listed at Appendix H and which are referred to throughout the Guide. Copies of those items and also of the Guide itself are available free of charge from all local tax offices which are listed at Appendix J. They are also available on the Revenue website at www.revenue.ie. This Guide is not, and does not purport to be, a statement of the law relating to VAT. The relevant law is contained in the Value-Added Tax Act, 1972, as amended by the various Finance Acts from 1973 to 2002 inclusive, and in various Regulations and Orders all of which comply with the Sixth Council Directive of the European Union dated 17 May, 1977 (77/388/EEC). The final interpretation of VAT law in any particular case or on any point to which the appeal procedure applies is a matter for the Appeal Commissioners and the Courts. Revenue Dublin Castle. www.revenue.ie

January 2003

iii

Charter of Rights
In your dealings with the Revenue Commissioners you are entitled to

COURTESY AND CONSIDERATION

To expect that Revenue staff will at all times carry out their duties courteously and considerately.

PRESUMPTION OF HONESTY
To be presumed to have dealt with your tax affairs honestly unless there is reason to believe to the contrary and subject to the Revenue Commissioners responsibility for ensuring compliance with the law.

INFORMATION
To expect that every reasonable effort will be made to give you access to full, accurate and timely information about Revenue law and your entitlements and obligations under it. So that they can do this, Revenue staff are entitled to expect that you will give them all the facts and the full cooperation which they need to deal with your affairs.

IMPARTIALITY
To have your affairs dealt with in an impartial manner by Revenue staff who seek to collect only the correct amount of tax or duty, no more and no less.

PRIVACY AND CONFIDENTIALITY

To expect that personal and business information provided by you will be treated in strict confidence and used only for purposes allowed by law.

INDEPENDENT REVIEW
To object to a charge to tax or duty if you think the law has been applied incorrectly and to ask that your case be reviewed. If the matter cannot be resolved to your satisfaction by Revenue officials you have rights in law to independent review.

COMPLIANCE COSTS
To expect that the Revenue Commissioners and their staff recognise the need to keep to the minimum necessary the costs you incur in complying with Revenue law, subject to their responsibility to carry out their functions efficiently and economically.

CONSISTENT ADMINISTRATION
To expect that the Revenue Commissioners will administer the law consistently and apply it firmly to those who try to evade paying their lawful share.

iv

Contents
CHAPTER 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 CHAPTER 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 General explanation of VAT What is VAT? Rates Taxable person Exempt persons Non-taxable entities Flat-rate farmers Registration VAT returns Amount on which VAT is chargeable Basis of accounting Right to deduct VAT Records to be kept Intra-Community trade Imports (non-EU) Exports (non-EU) Repayment of VAT to foreign businesses Repayments to unregistered persons Appeals Letter of expression of doubt Revenue internal review procedures The Revenue website VAT registration Taxable persons Thresholds How is the threshold determined? Exceptions Exempt persons and non-taxable entities acquiring goods from other Member States Fourth Schedule services Cultural, artistic, entertainment or similar services Option to register Registration procedures Registration of new business Cancellation of registration Relief for stock-in-trade for newly registered traders Group registration Who may not register in respect of supplies of goods or services? Premises providers for mobile traders Waiver of exemption (short-term lettings)

CHAPTER 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8

Supply of goods Taxable supplies of goods Self-supplies Gifts Advertising goods and industrial samples Replacement goods Supply of goods and services in exchange for vouchers, tokens etc. Prepaid telephone cards Payments received in advance deemed to be supplies

3.9 3.10 3.11 3.12 3.13 CHAPTER 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 CHAPTER 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 CHAPTER 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14

Services taxable as supplies of goods (the two-thirds rule) Auction and agency sales Property transactions Chain of traders Non-taxable supplies of goods Supply of services What is a service? Services taxable as supplies of goods (the two-thirds rule) Agency services Place of supply of services - general rule Property (immovable goods) Transport and related ancillary services Cultural, artistic, sporting, scientific, educational or entertainment services Fourth Schedule (or received) services Fourth Schedule services - summary table Repair, valuation and contract work International leasing of means of transport Self-supplies Amount on which VAT is chargeable General rule Rate of exchange Margin Scheme and Special Auction Scheme New motor vehicles Certain services received from abroad Packing and containers Postage and insurance reimbursement Treatment of mixed transactions - (package rule) Returned goods, discounts, bad debts etc. Dances VAT due and VAT deductible General rule on when VAT becomes due How the tax point is determined Alcohol products Moneys received basis of accounting Self-supplies Right to deduct VAT - general rule VAT not deductible Definition of passenger motor vehicles for VAT purposes Sales of goods on which no deduction is allowed on purchase Businesses engaged in both taxable and exempt activities VAT credits or deductions on purchases from unregistered farmers VAT deductions by motor dealers VAT deductions by dealers in agricultural machinery Time limit

vi

CHAPTER 7 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 CHAPTER 8 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 CHAPTER 9 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 CHAPTER 10 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9

Accounting for VAT When VAT becomes payable Annual returns VAT 3 return form Payment by direct debit Revenue On-Line Service (ROS) How to complete the VAT 3 return Interest Estimates, assessments and appeals When VAT on new vehicles and excisable goods is payable VAT as a preferential debt Overpayment of VAT/unjust enrichment Option for the moneys received or cash basis of accounting and special schemes for estimation of sales by retailers Description of moneys received basis Traders who may opt for moneys received basis Excluded transactions Procedure VAT liability on moneys received Withholding tax professional services Withholding tax relevant contracts tax Credit card transactions Changing from invoice/sales basis to moneys received basis Changing from moneys received basis to invoice/sales basis Credit notes Special schemes for estimation of sales by retailers Invoices, credit notes etc. Importance of invoices and credit notes Form of VAT invoice Time limit for issuing a VAT invoice Settlement vouchers and debit notes Increase in invoiced amounts Decrease in invoiced amounts Where a credit note is not required Incorrect amounts of VAT invoiced Payments received in advance Invoices issued by unregistered persons Electronic (paperless) invoices etc. Invoices, credit notes etc. issued in foreign currency Converting foreign currency invoices Records to be kept General Records of purchases Sales records Discounts and price reductions Retention of records by taxable persons Retention of records by non-taxable persons Microfilmed records Electronic invoicing and storage Inspection of records

vii

CHAPTER 11 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 CHAPTER 12 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 CHAPTER 13 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11 13.12 13.13 13.14 13.15 13.16 CHAPTER 14 14.1

Intra-Community supplies Single Market Supplies of goods to other Member States Certain transfers are not supplies Branch to branch transfers of goods Sales of new vehicles to persons in other Member States What is a new means of transport? Triangular transactions Verification of customers VAT numbers EU Commission database of VAT numbers Fraudulent claims for zero-rating Mail order and distance selling Excisable goods Intra-Community goods transport services VIES returns INTRASTAT returns Acquisitions from other Member States Acquisitions from other Member States Postponed accounting with full deductibility Liability for onward supply Partially exempt persons Deductibility and apportionment Transfers Calculation of VAT due on intra-Community acquisitions Persons required to register solely because of intra-Community acquisitions Intra-Community acquisitions by farmers Racehorse trainers Acquisitions of new means of transport Time when VAT becomes payable on new means of transport Intra-Community transport of goods INTRASTAT returns Intra-Community hire-purchase agreements Imports General When is VAT not payable on goods at importation? VAT 13A Scheme VAT-free importation of goods destined for another Member State Valuation for VAT purposes Customs value declared in a foreign currency Deferred payment Clearing taxable goods through Customs The importance of quoting VAT numbers correctly Credit in VAT returns for VAT on imported goods Parcel post importations of taxable goods VAT on parcel post importations of goods exceeding 260 in value or of spirits, wine or tobacco Payment of VAT by foreign sender (F.D.D.) Import and export services Shannon customs-free zone Ringaskiddy free port Exports What are exports?

viii

14.2 14.3 14.4 14.5 14.6 CHAPTER 15 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 15.12 CHAPTER 16 16.1 16.2 16.3 16.4 16.5 16.6 16.7 CHAPTER 17 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 CHAPTER 18 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 CHAPTER 19 APPENDICES Appendix A Appendix B Appendix C

Purchases of goods by visitors and other travellers - Retail Export Scheme Purchases for export Records etc. required in connection with exports Evidence of export of goods Exports by purchasers VAT rates Goods and services attracting VAT at the standard rate, currently 21% Goods and services attracting VAT at the zero rate Zero-rating under the VAT 13A scheme Goods and services subject to the 10% rate Goods and services attracting VAT at the 13.5% rate Exemptions Difference between exemption and zero-rating Repayments Intra-Community acquisitions and imports Formal determination of rate Appeals against formal determinations Letter of expression of doubt Changes in the rates of VAT Which VAT rate must the trader apply? Invoices Credit notes Payments in advance Contracts existing at time of a change in VAT rates Budget account sales, hire-purchase sales and other credit sales Stock on hands on the date of a change Building and associated services Building and other contractors Application of the 13.5% rate Fixtures The two-thirds rule Fittings Stage Payments Do-it-yourself (D.I.Y.) Property transactions Financial Services What are Financial services? Law Exempt supplies of services Taxable supplies of services Supplies of both exempt and taxable services Place of supply Insurance and insurance related services Group registration Main VAT Changes Exempted activities Goods and services chargeable at the zero rate Goods and services chargeable at 10%

ix

Appendix D Appendix E Appendix F Appendix G Appendix H Appendix I Appendix J INDEX

Goods and services chargeable at 13.5% Goods and services chargeable at 21% Eighth Schedule to the VAT Act, 1972 (as amended) Fourth Schedule to the VAT Act, 1972 (as amended) List of Statements of Practice etc. Sample of VAT3 return Useful Addresses, Telephone, Fax Numbers and e-mail addresses.

Chapter 1 General Explanation of VAT

This chapter sets out the basic principles of VAT. It describes how VAT works and indicates briefly who must register for VAT and what obligations this entails as regards accounting for the tax, record keeping etc.. More detail is contained in later chapters.

What is VAT?
1.1 VAT is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of goods and services to their customers. Each such trader in the chain of supply from manufacturer through to retailer charges the VAT on his or her sales and is entitled to deduct from this amount the VAT paid on his or her purchases. The effect of offsetting purchases against sales is to impose the tax on the added value at each stage of production - hence Value-Added Tax. The final consumer, who is not registered for VAT, absorbs VAT as part of the purchase price. The following example illustrates how this works:

Purchase Transactions
Price VAT Paid (Ex VAT) Manufacturer Wholesaler Distributor Retailer Consumer 100 200 300 500 21 42 63 105 Total Value Purchase Added Price 121 242 363 605 100 100 100 200 _____ 500

Sale Transactions
Price VAT Charged (Ex VAT) 100 200 300 500 21 42 63 105 Total Sale Price 121 242 363 605 Credit for VAT Paid 0 21 42 63 Net to Collector General 21 21 21 42 ____ 105

As may be seen from the above example, the consumer pays a total of 605 for the finished product, of which 105 is VAT.

Rates
1.2 The standard rate of VAT is 21%. The exceptions to the standard rate are contained in Appendices A, B, C, D and F to the Guide. There is also a special rate of 4.3% on livestock (i.e. live cattle, horses, sheep, goats, pigs, deer) as well as on greyhounds and hire of horses. A list of the rates applicable to a large range of goods and services is available on the Revenue website at www.revenue.ie.

Taxable person
1.3 A taxable person is an individual, partnership, company etc. which is, or is required to be, registered for VAT. Persons, whose annual turnover from supplies of taxable goods and services, or the value of whose acquisitions of goods from other Member States of the European Union, or of certain services received from abroad, or of certain received cultural and entertainment services, exceed or are likely to exceed certain limits, are obliged to register for VAT. While persons whose turnover from taxable activities does not exceed these limits are not obliged to register, they may register for VAT if they so wish. This subject is dealt with in greater detail in Chapter 2.

Exempt persons
1.4 Goods and services of the kind listed in Appendix A are exempt from VAT and suppliers of such goods and services are not obliged, nor indeed are they entitled, to register for VAT. An exception to this rule is the short-term letting of property, which allows the landlord to waive the exemption and to become a taxable person (see paragraph 2.14 of Chapter 2).

Non-taxable entities
1.5 Non-taxable entities include State bodies (such as Government Departments, local authorities, health boards etc.), educational establishments (such as schools, universities, VECs etc.), public hospitals, charities, sports bodies and church bodies - in fact all groups of persons (other than private individuals) engaged in any type of non-commercial activity. These are treated for VAT purposes as exempt persons (but see paragraphs 2.5 and 2.6 of Chapter 2, and VAT Information Leaflets Nos. 2/01, 9/01, 11/01, 13/01, and SP/VAT/1/95, which cover their obligation to register for VAT in certain circumstances). A farmer may also be obliged to register in respect of the acquisition of goods from other EU Member States or in respect of certain services received from abroad (see VAT Information Leaflet No. 12/01).

Flat-rate farmers
1.6 Farmers who do not register for VAT are compensated for the VAT they are charged on their purchases by means of a 4.3% flat-rate addition to the prices at which they sell their produce and services to VAT-registered persons. These farmers are known in the VAT system as flatrate farmers (see paragraph 6.11 of Chapter 6).

Registration
1.7 Revenue will issue a VAT registration number to an applicant where they are satisfied that the person is carrying on a taxable business in the State. The procedure for registration is outlined in Chapter 2.

VAT returns
1.8 A VAT-registered person normally accounts for VAT on a two-monthly basis (January/February, March/April etc.). The return is made on the form VAT 3 and this form together with a payment for any VAT due should be furnished to the Collector-General on or before the 19th day of the month following the end of the taxable period. For example, a return for the VAT period January/February, 2003 is due by 19 March 2003. The return form includes a Bank Giro slip for payment of tax due to the Collector-General (see Chapter 7). Traders

may submit their VAT returns using the Revenue Online Service (ROS). (See paragraph 7.5 of Chapter 7).

Amount on which VAT is chargeable

1.9 The amount on which VAT is chargeable is the total sum paid or payable to the person supplying the goods or services including all taxes, commissions, costs and charges whatsoever but not including the VAT chargeable in respect of the transaction (see Chapter 5).

Basis of accounting
1.10 Registered persons normally account for VAT on the invoice (sales) basis. This means that they become liable for VAT by reference to invoices issued and sales made by them to registered persons irrespective of whether payment has actually been received (see paragraph 6.2 of Chapter 6 and also Chapter 9). However, certain persons may opt to account for VAT on the moneys received (cash) basis, i.e. by reference to payments actually received by them (see Chapter 8).

Right to deduct VAT

1.11 In computing the amount of VAT payable in respect of a taxable period, a registered person may deduct the VAT charged on most goods and services which are used for the purposes of the taxable business. No deduction may be made, however, for the VAT on goods and services used for any other purpose (see Chapter 6).

Records to be kept
1.12 A VAT registered person must keep full and true records of all business transactions which affect his or her liability to VAT. The records must be kept up to date and must be sufficiently detailed to enable that person to accurately calculate liability or repayment and to enable the inspector of taxes to check the calculation, if necessary. Records must normally be preserved for six years from the date of the latest transactions to which they refer (see Chapter 10).

Intra-Community trade
1.13 The European Single Market changed the way in which VAT is accounted for on goods moving between Member States of the EU. These transactions are no longer regarded as imports, but as intra-Community acquisitions (see Chapter 12). Revised arrangements in relation to the zero-rating of the supply of goods to other Member States were also introduced (see Chapter 11).

Imports (non-EU)
1.14 For VAT purposes imports are goods brought into Ireland from non-EU countries. As a general rule, imported goods are liable to VAT at the point of entry into the State, at the same rate as applies to the sale within the State of similar goods (see Chapter 13).

Exports (non-EU)
1.15 For VAT purposes exports are goods supplied subject to a condition that they are to be transported to a place outside the EU. The zero rate of VAT applies to exports of such goods (see Chapter 14).

Repayment of VAT to foreign businesses

1.16 In general, persons who are engaged in business outside the State but who are not engaged in business in the State are able to claim a refund from Revenue of the VAT charged to them in respect of services and goods supplied to them for business purposes, where the VAT would be deductible by them if they were taxable persons in the State (see paragraph 6.6). Applications for such refunds may be made to the VAT Repayments Section, Accountant Generals Branch, Revenue, Kilrush Road, Ennis, Co. Clare. (VAT Information Leaflet No. 1/99 gives further details). However, VAT may not be reclaimed in respect of goods for supply within the State or in respect of motor vehicles of a kind referred to in paragraph 6.8 of Chapter 6 for hiring out for utilisation within the State (see VAT Information Leaflet No. 3/99). Non-established performers who supply cultural, artistic, entertainment or similar services in the State, the VAT on which is accounted for by reverse charge by the recipient, are also entitled to reclaim input VAT subject to the normal restrictions from the VAT Repayments Section.

Repayments to unregistered persons

1.17 There are special provisions for repayment of VAT incurred by unregistered persons in certain cases, e.g., on farm buildings by unregistered farmers, on certain supplies to unregistered sea-fishermen, on certain supplies to disabled persons and to diplomats. VAT Information Leaflet No. 18/01 is available on this subject.

Appeals
1.18 A person has the right to appeal against Section 22 estimates or Section 23 assessments (see paragraph 7.8) or against a determination made by Revenue in relation to the rate of VAT chargeable. A person also has the right of appeal in relation to charges made in accordance with regulations, for example, in connection with an application for de-registration, and in relation to all claims for repayment. Any question of the fact or law may be brought before the Appeal Commissioners, and the taxpayer, if dissatisfied with the decision of the Appeal Commissioners, may have the appeal re-heard by the Circuit Court. Both the taxpayer and Revenue may appeal to the High Court on a point of law, and from there to the Supreme Court. Because VAT is governed by EU law, the Appeal Commissioners or any of the courts may refer the case to the European Court of Justice (ECJ). Matters which may be appealed also include: a charge to tax in connection with the issue of an incorrect invoice or an issue of an invoice showing tax by a non-registered person, compulsory group registration, refusal to allow group registration and the cancellation of an existing group registration, a determination in relation to certain sports and leisure activities,

the refusal by Revenue to authorise a person to operate as a refunding agent for the VAT Retail Export Scheme, the treatment of a person who allows supplies to be made on land owned, occupied or controlled by him/her, as jointly and severally liable with another person, in relation to unforeseen changes in market conditions affecting the economic value of an interest in property being disposed of in certain circumstances, a charge of tax in accordance with regulations, a claim for repayment, a refusal by Revenue to treat a person as a taxable person, a refusal by Revenue as to whether an expression of doubt is genuine (see 1.19 below)

Letter of expression of doubt

1.19 VAT law provides that where a person is in doubt about the application of VAT law to a transaction, including the rate of VAT, s/he may lodge a letter of expression of doubt with Revenue. If the expression of doubt is accepted by Revenue as genuine, interest will not apply to any tax payable when the matter in doubt is resolved. In the event that Revenue refuses to accept that the expression of doubt is genuine, it is open to the taxpayer to have such refusal referred to the Appeal Commissioners. A Vat Information Leaflet No. 2/02 entitled A Letter of Expression of Doubt is available.

Revenue internal review procedures

1.20 Where a taxpayer wishes to seek a review of Revenues handling of his/her tax affairs, or a decision made by a Revenue official, s/he can choose that a review be undertaken at a local level either by the appropriate District Inspector or by the Regional Inspector. This request should be addressed in writing directly to the relevant person. Where a taxpayer does not wish the review to be undertaken locally, s/he can request that the review be undertaken either by The Director of Customer Services, Revenue, alone, or Jointly by the Director of Customer Services and an external reviewer (non-Revenue staff) appointed by Revenue. This should be done in writing to the Internal Review Unit, Office of the Chief inspector of taxes, Setanta Centre, Nassau Street, Dublin 2. A Statement of Practice SP-GEN2/99 entitled Revenue Internal Review Procedures is available from that office.

The Revenue website

1.21 The Revenue forms, guides, statements of practice, leaflets mentioned in this guide, and other information, are available on the Revenue website at www.revenue.ie.

Chapter 2 VAT registration

This Chapter deals with the rules relating to registration for VAT purposes. It describes who is obliged to register, who may not register, procedures for registration etc..

Taxable persons
2.1 A taxable person is one who, otherwise than as an employee, in the course or furtherance of business(a) supplies taxable goods or services in the State, (b) makes intra-Community acquisitions of goods in the State, (see Chapter 12) (c) receives taxable Fourth Schedule services (i.e. listed in the Fourth Schedule to the VAT Act, 1972 (as amended)) (Appendix G to this guide) from abroad, (see paragraphs 4.8 and 4.9 of Chapter 4), or (d) receives cultural, artistic, entertainment or similar services provided by a person not established in the State (see paragraph 4.7 of Chapter 4). As a general rule, only persons whose income is subject to taxation under the P.A.Y.E. system are regarded as employees. Taxable persons are obliged to register for VAT, and to comply with all necessary requirements arising from such registration (in particular, see Chapter 7) if any of the thresholds outlined below are exceeded, or are likely to be exceeded in a twelve month period.

Thresholds
2.2 In the case of supplies in the State and intra-Community acquisitions, registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve month period. However, it should be noted that in relation to Distance Selling at 2.2 (c) below, the threshold is based on a calendar year. The principal thresholds applicable are as follows(a) 25,500 in the case of persons supplying services, (b) 25,500 for persons supplying goods liable at the 13.5% or 21% rates which they have manufactured or produced from zero rated materials, (c) 35,000 for persons making mail-order or distance sales into the State, (d) 41,000 for persons making intra-Community acquisitions, (e) 51,000 for persons supplying goods, (f) 51,000 for persons supplying both goods and services where 90% or more of the turnover is derived from supplies of goods (other than of the kind referred to at (b) above), and

(g) A non-established person supplying taxable goods or services in the State is obliged to register and account for VAT irrespective of the level of turnover. A taxable person established in the State is not required to register for VAT if his or her turnover does not reach the appropriate threshold above. However, they may opt to register for VAT.

How is the threshold determined?

2.3 For the purposes only of deciding if a person is obliged to register for VAT, the actual turnover may be reduced by an amount equivalent to the VAT borne on purchases of stock for resale. Therefore the trader whose annual purchases of stock for resale are, say, 46,000 [38,017 plus 7,983 VAT at 21%] and whose actual turnover is, say, 58,000 inclusive of VAT, is not obliged to register. This is because the traders turnover, after deduction of the 7,983 VAT charged to him or her on purchases of stock, is below the registration limit of 51,000,

Exceptions
2.4 In the case of taxable Fourth Schedule services received from abroad (see paragraphs 4.8 and 4.9 of Chapter 4) or cultural etc. services received from a person not established in the State (see paragraph 4.7 of Chapter 4 for further details) no threshold applies and all such services are liable to VAT (see VAT Information Leaflet No. 9/01 for further details). Special rules also apply in the case of farmers and fishermen in receipt of Fourth Schedule services (see VAT Information Leaflet No. 12/01 for further details). The turnover thresholds set out in paragraph 2.2 do not apply to persons who are not established in the State. Where such persons supply taxable goods or services in the State in the course or furtherance of business, they are obliged to register and account for VAT in respect of all such supplies. Persons who make no taxable supplies in the State are neither obliged nor entitled to register for VAT in the State. (See VAT Information Leaflet No. 1/99 on foreign firms doing business in Ireland for further details).

Exempt persons and non-taxable entities acquiring goods from other Member States
2.5 Exempt persons (see paragraph 1.4 of Chapter 1) and non-taxable entities (see paragraph 1.5 of Chapter 1) who acquire or are likely to acquire more than 41,000 worth of goods from other Member States in any period of 12 months are obliged to register for VAT in respect of those intra-Community acquisitions. Exempt persons and non-taxable entities below this threshold may opt to register in respect of such acquisitions if they so wish. It should be noted that exempt persons and non-taxable entities acquiring new means of transport must register for VAT irrespective of the value. It should be further noted that registration by exempt persons etc. for receipt of intra-Community acquisitions does not give VAT deduction rights (see Chapter 6, also VAT Information Leaflet No. 13/01 on exempt persons and VAT Information Leaflet No. 11/01 on non-taxable entities).

Fourth Schedule services

2.6 Persons who receive from abroad for business purposes any of the taxable services mentioned in paragraph 4.8 of Chapter 4 (i.e. hiring or leasing of certain goods, advertising, consultancy, copyright, data processing, engineering and the provision of information, telecommunications services, the provision of staff and certain other services) are obliged to register for, and pay, VAT in respect of all such services, regardless of value. For VAT purposes, the recipient of such services is regarded as the supplier of the services to himself or herself. Traders should note that no threshold applies in these cases (see VAT Information Leaflet No. 9/01 for further details).

Cultural, Artistic, Entertainment or similar services

2.7 Where a person not established in the State provides cultural, artistic, entertainment or similar services in the State, the promoter, agent or any person who receives such services for business purposes must account for VAT thereon by reverse charge. There is no turnover threshold for the receipt of these services (see also paragraph 4.7 of Chapter 4). A VAT Information Leaflet No. 3/02 is available.

Option to register
2.8 A person whose turnover from supplies in the State or whose intra-Community acquisitions do not exceed the appropriate thresholds may opt to become registered but only from a current date. The procedures for those opting for VAT registration are the same as those for traders who are obliged to register and a person who opts to become registered is subject to the same obligations as other registered traders (but see paragraph 2.9 of Chapter 2).

Registration procedures
2.9 Every applicant for VAT registration must complete either a form STR, TR1 or TR2, each of which is available from the Taxes Central Registration Office (TCRO), Arus Brugha, 9/15 Upper OConnell St., Dublin 1, from the office of any inspector of taxes, or from the Revenue website at www.revenue.ie. The application form must be completed, signed and returned to the TCRO or to the local inspector of taxes as appropriate. Registration is effective from the date on which the application for registration is processed, or from such earlier date as may be agreed between the Inspector and the applicant. In the case of a person not obliged to register but who is opting to do so, the effective date will be not earlier than the beginning of the taxable period during which the application is made. Any change in the particulars supplied by a trader for the purposes of registration (for example, a sole trader becoming a limited company or the cessation of a partnership) must be notified to the Inspector within 30 days of the change.

Registration of new business

2.10 A person who is setting up a business but who has not yet commenced supplying taxable

goods or services may register for VAT as soon as it is clear that he or she will become a taxable person. This will enable that person to obtain credit for VAT on purchases made before trading actually commences. In general, farmers are not obliged to register for VAT in respect of their farming activities. However special rules apply to farmers who, for example, supply bovine semen, agricultural

contracting services and who retail horticultural products. VAT Information Leaflets Nos. 12/01 and 24/01 are available.

Cancellation of registration
2.11 A person who has opted to register for VAT may, subject to conditions which may include the repayment of any excess of VAT deductions over payments, cancel his or her registration by arrangement with the local inspector of taxes. Similarly, a person whose turnover has fallen below the appropriate turnover threshold may have the registration cancelled. A person ceasing to trade should notify the inspector of taxes of this fact in order that the VAT registration number may be cancelled promptly. This is important to note, otherwise return forms and demands for estimated VAT liability will continue to issue automatically. Revenue will also cancel a persons VAT registration if he or she has been registered in error, or he or she has ceased to be a taxable person. In circumstances where a person elects to register for VAT, a cancellation of registration may give rise to recovery by Revenue of all or some of the net VAT repaid to the person during the period of election.

Relief for stock-in-trade for newly registered traders

2.12 A person who has become liable for VAT may claim a credit, if any, for the stock-in-trade (i.e. goods for resale but not capital goods, tools etc.) held at the beginning of the first taxable period for which he or she is registered. Where the rates actually charged at the time of purchase of the goods differ from the rates applying at the time the relief is being sought the inspector of taxes should be consulted in relation to the amount to be reclaimed. No relief is available in respect of VAT on goods purchased prior to registration by a person supplying services.

Group registration
2.13 Where Revenue are satisfied that it is in the interest of efficient administration and that no loss of VAT is involved, they may treat a group of persons established in the State, such as a number of companies which are closely bound by financial, economic and organisational links, as a single taxable person. An arrangement of this nature generally removes the necessity of issuing VAT invoices in respect of inter-group transactions (except in the case of certain property transactions). While one person or company in the group will be responsible for compliance with all VAT requirements for the whole group, including the lodgment of VAT returns/payments etc. with the Collector-General, each person or company in the group will be jointly and severally liable in the event that such compliance is not achieved. Any group wishing to adopt such an arrangement should apply to the local inspector of taxes. If, subsequent to the approval of a group registration, a new company is to be included in the group, permission for inclusion in the group registration must be obtained from the inspector of taxes.

Who may not register in respect of supplies of goods or services?

2.14 A person carrying on exempt activities other than in the exceptional circumstances set out in paragraph 2.16 below and a person carrying on activities otherwise than in the course or furtherance of business may not register for VAT in respect of these activities. However, a person carrying on exempt activities may be required to register in respect of intra-Community acquisitions of goods, Fourth Schedule services received from abroad and cultural, artistic, entertainment and similar services received from persons not established in the State (see

paragraphs 2.5, 2.6, and 2.7). There is no provision for deductibility of VAT on purchases of goods and services by such persons.

Premises providers for mobile traders

2.15 Where a premises provider allows a mobile trader, not established in the State, to supply goods on the premises for a period of less than seven days, s/he must provide details to the local inspector of taxes, including the following information, not later than fourteen days before the trader intends to trade on the land: the name and address of the trader the dates on which the trader intends to trade on the premises providers land, and the address of the land If these details are not provided the premises provider may be made jointly and severally liable for the VAT due by that mobile trader.

Waiver of exemption (short-term lettings)

2.16 The right to exemption from VAT in respect of rents received from the short-term ( i.e. less than 10 years) letting of land and buildings may be waived, apart from rents received in respect of developed property which has failed the economic value test. The effect of waiving exemption is that the person becomes a taxable person, i.e. he or she becomes liable for VAT on rents at the 21% rate but he or she has a right to a deduction for VAT paid on inputs. In general, the waiver must cover all such lettings which are made by that person. A landlord, for example, may not waive exemption in respect of some of the property and retain exemption in respect of other property. There is one exception to this general rule, in the case of the short-term letting of property which has been the subject of a surrender of a taxable lease. Waiver of the exemption will apply to that letting only. A person who wishes to waive exemption must apply to the local inspector of taxes. Such a waiver cannot normally be back-dated and will apply only from the taxable period in which application is made. However, in certain limited circumstances, application may be made to the inspector of taxes for such back-dating (see the Guide to VAT and Property Transactions, for further details).

10

Chapter 3 Supply of Goods

This Chapter describes the various ways in which supplies of goods for VAT purposes are made, and outlines the VAT treatment appropriate to each type of supply.

Taxable supplies of goods

3.1 A taxable supply of goods means the normal transfer of ownership of goods (including developed property) by one person to another and includes the supply of goods liable to VAT at the zero rate. It also means: (a) the transfer of ownership of goods by agreement, other than the transfer of ownership of goods to a finance company which are for supply in the course of a hire-purchase or credit sale agreement; (b) the sale of movable goods on a commission basis by an auctioneer or agent acting in his or her own name but on the instructions of another person; (c) the handing over of goods under a hire-purchase contract; (d) the handing over by a person to another person of immovable goods (property) which have been developed; (e) the seizure of goods by a sheriff or other person acting under statutory authority; (f) the application or appropriation by the taxable person of materials or goods to some private or exempt use;

(g) the provision of electricity, gas and any form of power, heat, refrigeration or ventilation; (h) with some exceptions, the transfer of goods from a business in the State by a taxable person to the territory of another Member State for the purposes of the business (see Chapter 11).

Self-supplies
3.2 The transactions referred to in paragraph 3.1(f) are called self-supplies. A self-supply of goods occurs when a taxable person diverts to private or exempt use goods in respect of which he or she is entitled to a VAT deduction. For example, if a jeweler diverts one of his or her watches from stock-in-trade to his or her own personal use, this is a self-supply. Also, if a builder uses building materials to build or repair his or her private house this again is a selfsupply. In both these examples the supplier becomes the final consumer and he or she must therefore suffer the VAT on those supplies, in the same way as every other final consumer does. Traders do this by accounting for VAT on the cost to themselves of the goods, exclusive of VAT. An example of a self-supply to an exempt business use is the diversion by a car dealer of part of his or her stock-in-trade for use in a taxi business.

11

Goods acquired VAT free as part of the purchase of a business do not escape the self-supply charge if they are subsequently diverted to private use or given away free of charge.

Gifts
3.3 With some exceptions, gifts of taxable goods made in the course or furtherance of business are liable to VAT unless their cost to the donor, excluding VAT, is 20 or less. Where gifts are taxable, the chargeable amount is their cost to the donor, excluding VAT. In the case of gifts costing more than 20 excluding VAT, no allowance can be made for the amount below which gifts are not taxable. Accordingly the person who makes a gift of goods costing 20 excluding VAT, has no liability, while the same person making a gift of goods costing 21 excluding VAT, must account for VAT on the full 21. The rate of VAT depends on the goods involved.

Advertising goods and industrial samples

3.4 Advertising goods and industrial samples given free to customers in reasonable quantities, in a form not ordinarily available for sale to the public, are not taxable, even where the 20 limit is exceeded.

Replacement goods
3.5 Replacement goods supplied free of charge in accordance with warranties or guarantees on the original goods are not taxable.

Supply of goods and services in exchange for vouchers, tokens etc.

3.6 The sale of gift vouchers etc. (other than vouchers sold to and by intermediaries) is not liable to tax except where, and to the extent that, the amount charged exceeds the value shown on the voucher. The supply of goods or services in exchange for such vouchers, tokens etc. is liable at the rate appropriate to the goods or services supplied. Generally, the chargeable amount is the open market value of the goods or services supplied. Where vouchers and tokens having a face value are supplied at a discount to an intermediary with a view to their ultimate re-sale to private consumers, such tokens or vouchers become liable to VAT at the standard rate of 21 per cent at that time on the consideration received. VAT is also chargeable on the re-sale of the vouchers by the intermediary to the private customer. VAT does not arise when these vouchers are redeemed for goods. Traders must keep records in sufficient detail to distinguish between supplies of vouchers directly to consumers and supplies of vouchers to intermediaries. However, a different tax treatment arises in the case of discounted vouchers sold to a company which buys them in bulk to give them to staff as an incentive. Where a supplier of goods sells a voucher at a discount to a buyer, and promises to subsequently accept that voucher at its face value in full or part payment against goods purchased by a customer who was not the buyer of the voucher, then subject to conditions, the amount attributable to the voucher is the sum of money obtained by the supplier of the goods from the discounted sale of the voucher. The initial transaction involving the sale of the voucher is not a taxable transaction and VAT becomes chargeable only when the voucher is presented in exchange for goods. This relief is only permitted in cases where a proper audit trail is maintained by the trader to the satisfaction of his/her local inspector of taxes.

12

Prepaid telephone cards

3.7 Prepaid telephone cards are not vouchers for VAT purposes, even when they have an amount stated on them. They are taxable at the time of sale (see VAT Information Leaflet No. 7/98 for further details).

Payments received in advance deemed to be supplies

3.8 Where a payment on account or other payment, full or partial, is received by a taxable person before he or she has made or completed a supply of goods or services, a supply is deemed to have taken place at the time of receipt of the payment to the value of such payment.

Services taxable as supplies of goods (the two-thirds rule)

3.9 A transaction which may appear to be a supply of a service is nevertheless taxable as a supply of goods if the value of the goods, that is their cost excluding VAT, to the service contractor used in carrying out the work exceeds two-thirds of the total charge, exclusive of VAT. For example, where the cost to the repairer of materials used in the repair of a washing machine is 120 exclusive of VAT, and the total charge for the repair work is 150, the 21% rate applicable to the materials applies, rather than the 13.5% rate which normally applies to repair services. It should be noted that the repair and maintenance of motor vehicles and agricultural machinery is not subject to the "two-thirds" rule.

Auction and agency Sales

3.10 The sale of movable goods by agents or auctioneers who conclude agreements in their own name but on the instructions of, and for the account of, another person are treated as supplies of goods, at the appropriate rates, at the time that the agents or auctioneers make the sale. A detailed information leaflet is available on the VAT treatment of Auctioneers, and Auction and Agency Sales (VAT Information Leaflet No. 5/98).

Property transactions
3.11 In general the supply of a long term interest in property (i.e. 10 years or more) is regarded as a supply of goods for VAT purposes. The supply of property does not attract liability to VAT unless all the conditions outlined in paragraph 17.8 of Chapter 17 are satisfied. See also the guide entitled VAT and Property Transactions.

Chain of traders
3.12 Where there is a chain of buyers and sellers in any transaction and the goods which are the subject of the transaction are delivered by agreement directly by the first seller in the chain to the last buyer, each seller in the chain is deemed for the purposes of VAT to have made a supply of the goods to the next buyer. However, see paragraph 11.7 of Chapter 11 dealing with intra-Community supplies.

13

Non-taxable supplies of goods

3.13 Liability to VAT does not arise where goods change ownership as security for a loan or debt or on the supply of repossessed goods by a hire-purchase company where the original customer was not entitled to deductibility on the goods in question, or where a business is transferred in whole or part from one taxable person to another. Goods supplied free of charge under warranty or guarantee are not liable to VAT but goods given away free of charge in other circumstances are, in general, taxable unless they are below 20 in value (see paragraph 3.3).

14

Chapter 4 Supply of Services

This Chapter describes the various categories of services supplied for VAT purposes and outlines the VAT treatment appropriate to each type of supply. What is a service? 4.1 For VAT purposes a service is any commercial activity other than a supply of goods. Typical services include the services of caterers, mechanics, plumbers, accountants, solicitors, consultants etc. and the hiring or leasing of goods. The supply of digitised goods delivered online is regarded as the supply of a service for VAT purposes as is the physical supply of customised software. Services also include refraining from doing something and the granting or surrendering of a right. Contract work, that is the handing over by a contractor to a customer of movable goods made or assembled by him or her from goods entrusted to him or her by the customer, is also regarded as a service. Services taxable as supplies of goods (the two-thirds rule) 4.2 With the exception of contract work, a transaction which may appear to be the supply of a service is nevertheless taxable as a supply of goods if the VAT exclusive cost of the goods to the service contractor supplied in carrying out the work exceeds two-thirds of the VAT exclusive charge to the customer (see also paragraph 3.9 of Chapter 3). Agency services 4.3 Agents, other than agents selling movable goods who conclude agreements in their own name but on the instructions of and for the account of another person, are deemed to be supplying services and are obliged to register and account for VAT, generally at the 21% rate, in respect of their supplies of agency services subject to the 25,500 turnover limit (see also paragraph 3.10 of Chapter 3 in relation to auction and agency sales). Travel agents, insurance agents, banking agents and certain related agents (see paragraphs (ix) and (xi) of Appendix A) are exempt from VAT. Place of supply of services - general rule 4.4 In order to avoid double taxation or non-taxation, the general rule in relation to the place of supply of services is that services are taxable at the place where the supplier has established his or her business. For most services there is little difficulty in determining the place of their supply. For example, the services of cinemas, restaurants, hairdressing salons etc. are supplied where the business is situated. Similarly, the place of supply of repair services is also the place where the repair is actually carried out. The exceptions to this rule are dealt with in paragraphs 4.5 to 4.11 below. Property (immovable goods) 4.5 The place where services connected with immovable goods are supplied is the place where the property is situated. Services supplied in connection with property situated outside the State are not therefore liable to Irish VAT. The services may, however, be liable to VAT in the other country. For example, the design of an office premises in the UK by an architect in the State is not liable to Irish VAT but may be liable to VAT in the UK.

15

Transport and related ancillary service 4.6 These services, whether in relation to goods or passengers, are in most cases treated as supplied where the transport takes place. However, special rules relate to the transport of goods between EU Member States and these are dealt with in paragraph 11.13 of Chapter11. A VAT Information Leaflet (No. 16/01) on intra-Community goods transport is available. The VAT treatment of haulage services following importation of goods is dealt with in the Technical Briefing on the European Communities (Value-Added Tax) Regulations 1995. Cultural, artistic, sporting, scientific, educational or entertainment services 4.7 The place where these services are supplied for VAT purposes is the place where they are physically performed. For example, fees received by an entertainer in respect of a concert given in Ireland are liable to Irish VAT. Similarly, an Irish based entertainer performing in the UK is outside the scope of Irish VAT. However, it should be noted that where a person not established in the State supplies a service of a cultural, artistic or entertainment nature to a person in the State for business purposes, e.g. a promoter, the recipient of the service is required to register and account for VAT on the service on the reverse charge basis. When the recipient in the State is a body which has received funding from the Arts Council in the 3 years prior to the passing of the Finance Act 2002, Revenue may on request defer the obligation on the recipient to account for the tax to a time not later than 1 March 2003. In these circumstances the non-established performer remains liable for the VAT. This does not apply to the recipients in the State of sporting, scientific or educational services. Where the owner of a premises allows a promoter not established in the State to supply services of a cultural, artistic or entertainment nature on those premises s/he must, not later than fourteen days before the event or performance is scheduled to begin, notify the local inspector of taxes of the name and address of the promoter and details of the performance. Where these details are not furnished to the local inspector, the premises provider may be made jointly and severally liable with the promoter for VAT due. A VAT Information Leaflet No. 3/02 is available. Fourth Schedule (or received) services 4.8 A number of services, all of which are listed in the Fourth Schedule to the VAT Act, 1972 (as amended), are deemed to be supplied in the place where the customer is located, provided that they are supplied for business purposes within the EU, or for any purpose outside the EU. Supplies of these services to private individuals within the EU are taxable under the general rule (see paragraph 4.4). The services affected are:(a) Transfers and assignments of copyrights, patents, licences, trade marks and similar rights; (b) hiring out of movable goods other than means of transport; (c) advertising services; (d) services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services, data processing and provision of information (but excluding services connected with immovable goods);

16

(e) telecommunications services; (f) acceptance of any obligation to refrain from pursuing or exercising in whole or in part, any business activity or any such rights as are referred to in paragraph (a);

(g) banking, financial and insurance services (including re-insurance, but not including the provision of safe deposit facilities); (h) the provision of staff; (i) the services of agents who act in the name and for the account of a principal when procuring for him or her any services specified above.

Fourth Schedule services - summary table 4.9 A summary of the VAT treatment of such services is set out in tabular form as follows: Country of establishment of supplier Ireland Ireland Ireland Ireland Other EU State Other EU State Outside EU Outside EU Country in which customer established Ireland Other EU State Other EU State Outside EU Ireland Ireland Ireland Ireland Status of customer Business or Private Business Private Business or Private Business Private Business Private Place of supply Ireland Other EU State Ireland Outside EU Ireland Other EU State Ireland Outside EU Person liable to pay Irish VAT Suplier No Irish VAT Supplier No Irish VAT * Customer No Irish VAT Customer No Irish VAT *

* However, where telecommunications services are supplied to a private customer and the effective use and enjoyment of these services takes place within the State, the place of taxation is Ireland and VAT registration by the supplier is required. It should be noted that financial services supplied by a supplier in the State to a private individual from outside the EU, who avails of them here, are deemed to be supplied in the State (see paragraph 18.6 of Chapter 18 for details). Exempt persons and flat-rate farmers are obliged to register and account for VAT in respect of received Fourth Schedule services irrespective of the value. Non-taxable entities such as Government Departments and local authorities who receive Fourth Schedule services in circumstances where EU VAT is not chargeable are obliged to register and account for VAT in the State. VAT Information Leaflets Nos. 9/01, 11/01 and 12/01 are available.

17

Repair, valuation and contract work 4.10 In general, work on movable goods such as repair, maintenance and contract work is deemed to be supplied where the work is physically performed. This also applies to the valuation of movable goods. However, in circumstances where the goods are dispatched or transported out of the Member State where the valuation of, or work on, movable goods, including contract work, was physically carried out, such work is taxed by reference to the place where the customer is located. The conditions for this are as follows: The customer must prove that s/he is registered for VAT in another Member State; the customer must confirm that s/he does not supply goods or services in Ireland; the supplier must show the customers VAT number on the invoice and endorse the invoice to the effect that the supplier has not charged VAT on the supply. A Technical Briefing on the European Communities (Value-Added Tax) Regulations, 1995 is available. International leasing of means of transport 4.11 Where a lessor in one Member State hires or leases vehicles to customers in another Member State, the place of supply is the Member State where the lessor has established his or her business. However, where, for example, a lessor established in another Member State provides vehicles to customers in this State from a fixed establishment in this State and has his or her own staff or a structure here, adequate in terms of human and technical resources to supply the services in question, the services are regarded as supplied in the State and the lessor is liable to Irish VAT (see VAT Information Leaflet No.3/99 for further details on this subject). Self-supplies 4.12 In certain limited circumstances, a liability to VAT can arise where traders provide a service to themselves. At present a self-supply of a catering service is the only such service which attracts VAT. Although other self-supplies of services are not at present taxable, VAT must be accounted for on the goods used in supplying such self-services. For example, the builder who uses business goods to repair his private house is liable for VAT on the cost of the goods used in the repairs. There is no liability however on the value of the labour supplied.

18

Chapter 5 Amount on which VAT is chargeable

This Chapter sets out in detail how the amount on which VAT is chargeable is determined in various different circumstances.

General rule
5.1 In the case of the supply of goods or services and the intra-Community acquisition of goods, the amount on which VAT is chargeable is normally the total sum paid or payable to the person supplying the goods or services including all taxes, commissions, costs and charges whatsoever but not including the VAT chargeable in respect of the transaction. VAT on imports is charged on the customs value of the goods (see Chapter 13). Where goods or services are supplied otherwise than for money, for example, where a customer agrees to pay the supplier in kind, the amount on which VAT is chargeable is the open market or arms length value of the goods or services supplied. In the case of credit card transactions the taxable amount is the total amount actually charged to the customer by the supplier. Amounts withheld by the credit card companies from their settlements with the traders concerned form part of the taxable amount.

Rate of exchange
5.2 In the case of amounts invoiced in foreign currency, the rate of exchange applicable when the VAT becomes due should normally be used. Alternatively, agreement may be reached with the local inspector of taxes if some other method is to be used (see paragraph 9.13 of Chapter 9).

Margin Scheme and Special Auction Scheme

5.3 Special schemes operate in relation to the sale by dealers and auctioneers of second-hand movable goods, works of art, collectors items and antiques. The principal feature of the schemes is that dealers and auctioneers effectively pay VAT only on their margin in certain circumstances. (See VAT Information Leaflets Nos. 5/98 and 17/01 for further information). A special scheme also operates in relation to the VAT treatment of second-hand motor vehicles. It provides for the right to deduct residual VAT in respect of the purchase of a qualifying second-hand vehicle (including by way of trade-in). A separate VAT Information Leaflet on the VAT treatment of second-hand vehicles (October 1995) is available.

New motor vehicles

5.4 The amount on which VAT is chargeable on a new motor vehicle is normally the price of the vehicle before Vehicle Registration Tax is applied.

19

Certain services received from abroad

5.5 The amount on which VAT is chargeable in relation to Fourth Schedule services (see paragraphs 4.8 and 4.9 of Chapter 4) and intra-Community goods transport services (see paragraph 11.14 of Chapter 11) received from abroad will normally be the amount payable in respect of those services.

Packing and containers

5.6 When goods are supplied packed for sale and no separate charge is made for the packages

in which the goods are contained, the rate of VAT chargeable is that applying to the goods. If containers are charged for separately from the goods, the transaction is regarded as consisting of separate sales of goods and of packages and each such separate sale is chargeable at the appropriate rate. Where containers are returnable and a separate charge in the nature of a deposit is raised for them on an invoice, the containers are regarded as being still the property of the supplier and they are not subject to VAT at the time of supply. VAT at the appropriate rate is, however, payable on the value of containers which are not returned to the supplier. This VAT may be accounted for at the time when the containers account is being balanced and a charge is being raised by the supplier against the customer for the value of containers not returned.

Postage and insurance - reimbursement

5.7 Where amounts are charged separately for postage and insurance and paid over in their entirety to An Post or to the insurer on behalf of customers, suppliers may treat such charges as not being subject to VAT. If, for example, a trader charges an extra 1 for posting an order and such amount of postage is actually paid over, the 1 may be treated as exempt. Similarly, if a car hire company charges 50 for motor insurance, and that amount is actually paid over in full to insurers in the name of the lessee, the 50 may be treated as exempt. However, if a charge is made for posting and/or insurance, and a lesser amount is paid over by the supplier to An Post or to the relevant insurance company, the charge made to the customer is regarded as part of the total price of the goods/service supplied, and is subject to the VAT rate applicable to the goods/service in question.

Treatment of mixed transactions - (package rule)

5.8 If an article comprising goods taxable at different rates is sold as a unit for a single consideration, (for example, a story book and accompanying cassette) VAT is payable on the entire amount charged at the rate applicable to the higher VAT rated item. The same principle applies to services liable at different rates or to a mixture of goods and services.

Returned goods, discounts, bad debts etc.

5.9 Where, after a supply, there is an adjustment in the consideration, e.g. because goods have been returned, or discounts or other price adjustments have been allowed, the VAT is correspondingly adjusted. This adjustment is also allowed, subject to the Inspectors agreement, where bad debts have been written off after VAT has been accounted for on the supply. However, this adjustment is not allowed in respect of property transactions. Where any price reduction has been allowed by one VAT-registered person to another after the issue of an invoice showing VAT, and a corresponding VAT adjustment is actually made, the person who has issued the invoice is required to issue a credit note showing the amount of VAT by which the liability has been reduced. The reason for this requirement is that, in a

20

transaction between registered persons, the VAT charged by the seller may normally be set off by the purchaser against his or her own liability. In practice it is unnecessary to issue credit notes for VAT and to adjust VAT liability because of discounts or other price allowances if both parties are registered for VAT and the discounts or price allowances are applied only to the price of the goods and not to the VAT. If this is done, the sellers VAT liability and the purchasers VAT credit are unaltered. Such a procedure is permissible provided both parties agree. However, even with both parties agreement, it is not permissible if the seller is a person authorised to account for VAT by reference to the cash receipts basis (see paragraph 8.11 of Chapter 8).

Dances
5.10 In the case of admission charges to dances on licensed premises the obligation to account for the VAT is the responsibility of the licensee, notwithstanding that such admission charges may be received or receivable by a promoter or another person. The amount on which VAT is chargeable is the total consideration receivable in connection with the dance. This includes the amounts paid by those admitted to the dance together with any other consideration receivable in connection with the dance. Where however, persons are admitted to dances for amounts less than the face-value of the ticket, or where no admission is charged (complimentary tickets), the normal VAT rules apply i.e. VAT is accounted for on the amount actually received. A VAT Information Leaflet No. 20/01 is available..

21

Chapter 6 VAT due and VAT deductible

This Chapter describes the tax point, i.e. the point in a transaction when VAT becomes due, or when a liability for VAT arises and it also outlines the circumstances under which VAT is deductible by the trader/supplier. Accounting for VAT is a separate matter which is dealt with in Chapter 7.

General rule on when VAT becomes due

6.1 VAT becomes due, or a liability for VAT arises at the time when a supply of goods or services takes place (see paragraph 6.2) of Chapter 6 An exception to this rule is where a taxable person has been specifically authorised by Revenue to account for VAT on the basis of moneys received (see Chapter 8).

How the tax point is determined

6.2 The general rule outlined in paragraph 6.1 is subject to the following qualifications: in dealings between taxable persons, VAT becomes due on the date of issue of the invoice, or on the date on which the invoice should have been issued, if the issue has been delayed (see paragraph 9.3 of Chapter 9) and where payment in whole or in part in respect of a transaction is received before the date on which the VAT would normally be due, VAT is due on the payment received by reference to the date of receipt of the payment. The exceptions to this rule are as follows:VAT is due on advance payments, received by a taxable person operating on the invoice basis of accounting, from another taxable person, by reference to the date when the invoice is issued or ought to be issued after the advance payment; VAT is normally due on intra-Community acquisitions on receipt of the invoice but at the latest on the 15th day of the month following that during which the goods arrive; VAT is due in respect of intra-Community acquisitions of new motor vehicles other than by a person entitled to deductibility (see paragraph 6.6 below), normally at the time of payment of Vehicle Registration Tax or, if no Vehicle Registration Tax is payable, not later than the fifteenth day of the month following that in which the intra-Community acquisition occurs; VAT is due in respect of intra-Community acquisitions of new aircraft and boats (other than by a person entitled to deductibility) within three days of arrival in the State and is payable to the relevant Collector of Customs and Excise; VAT is due in respect of goods imported from non-EU countries at the point of entry (see Chapter 13);

22

VAT is due on the intra-Community acquisition in the case of excisable goods by reference to the time when the excise duty becomes payable (however see paragraph 6.3); in the case of goods imported under a duty suspension arrangement, VAT is payable when those goods leave the suspension arrangement.

Alcohol products
6.3 Special provisions exist for alcohol products which are held under a duty suspension arrangement (i.e. in bond). VAT is generally due with the excise at the time of removal of the alcohol from the duty suspension arrangement unless the alcohol leaves the State by way of intra-Community supply, export or sale in a duty free outlet to a person departing the Community. In these situations excise duty is not normally due in the State but the supply is deemed to take place here for VAT purposes and the general rules regarding VAT invoices etc. apply (see Statement of Practice (SP-VAT/3/93) for further information).

Moneys received basis of accounting

6.4 In the case of persons who have been authorised to account for VAT on the basis of moneys received (see Chapter 8), VAT liability arises on the date on which the payment is actually received. The rate of VAT applicable is that in force at the time of the supply and not at the time when the money is received.

Self-supplies
6.5 VAT in respect of self-supplies (see paragraphs 3.2 of Chapter 3 and 4.12 of Chapter 4) becomes due in all cases at the time when the goods are appropriated or withdrawn from business stock or when the catering services are supplied.

Right to deduct VAT - general rule

6.6 In computing the amount of VAT payable in respect of a taxable period, a registered person may deduct the VAT charged on most goods and services which are used for the purposes of his or her taxable business. No deduction may be made for the VAT on goods and services used for any other purpose such as VAT exempt activities, (but see paragraph 6.10 below). To be entitled to the deduction the trader must have a proper VAT invoice or relevant customs receipt as appropriate. Persons required to register for VAT in respect of intra-Community acquisitions only are not entitled to a deduction in respect of that VAT. While a deduction of VAT is allowable only on purchases which are for the purposes of a taxable business, a situation may arise where a portion of a traders purchases may be for the purposes of the taxable business and the remaining portion for the traders private use, for example, electricity, telephone charges, heating expenses etc. where the business is carried on from the traders private residence. It may also arise that inputs may be used for both taxable and non-taxable activities. In such cases, only the amount of VAT which is appropriate to the taxable business is deductible. Similarly where a trader engages in both taxable and exempt activities (dual use inputs) it will be necessary to apportion the credit in respect of these dual use inputs. Paragraph 6.10 below deals with the deduction of VAT in businesses engaged in both taxable and exempt activities. As an exception to this general rule, input VAT is deductible subject to the normal restrictions (see paragraph 6.7) by persons carrying on the following activities:transport outside the State of passengers and their accompanying baggage;
23

certain financial and insurance services supplied directly in connection with the export of goods to a place outside the EU; certain financial and insurance services supplied outside the EU; supplies of goods and services outside the State which would be taxable supplies if made in the State apart from passenger motor vehicles as outlined in paragraph 6.8 for hiring out for utilisation within the State.

VAT not deductible

6.7 A trader may not deduct VAT on any of the following, even when the goods and services in question are required or used for the purposes of a taxable business:expenses incurred on the provision of food or drink, or accommodation or other personal services, for the taxable person, his or her agents or employees, except to the extent, if any, that such provision constitutes a supply of services in respect of which he or she is accountable for VAT; expenditure incurred by a taxable person on food or drink, or accommodation or other entertainment services, where such expenditure forms all or part of the cost of providing an advertising service in respect of which tax is due and payable by the taxable person; entertainment expenses incurred by a taxable person, his or her agents or employees; the acquisition (including hiring) of passenger motor vehicles otherwise than as stock-intrade (that is, for resale) or for hire in a vehicle hire business or for use giving driving instruction in a driving school business (see paragraph 6.8); the purchase of petrol otherwise than as stock-in-trade; contract work involving the handing over of goods when such goods are themselves not deductible.

Definition of passenger motor vehicles for VAT purposes

6.8 For VAT purposes the term passenger motor vehicles in paragraph 6.7 includes cars generally; sports motor vehicles, estate cars, station wagons, and motor cycles, motor scooters, mopeds and autocycles. The term does not include passenger vehicles with a capacity of more than 16 persons, vans, lorries or invalid vehicles. Any question as to whether a particular vehicle is or is not a passenger motor vehicle, as defined, should be submitted for decision to the local inspector of taxes, together with manufacturers literature etc..

24

VAT on the intra-Community acquisition, import, outright purchase, hire-purchase, hiring, leasing or otherwise, of passenger motor vehicles is deductible only in the exceptional circumstances specified in paragraph 6.7. above.

Sale of goods on which no deduction is allowed on purchase 6.9 As a general rule, if registered persons are not entitled to a credit on the purchase of goods
for use in their business, they are not liable for VAT on the sale of such goods (see also paragraph 6.12 for special provisions relating to motor dealers). If they are entitled to any credit on the purchase, they are liable to VAT on the sale.

Businesses engaged in both taxable and exempt activities

6.10 As stated in paragraph 6.6 a deduction of VAT is allowable on purchases for the purposes of a taxable business. If a person carries on both a taxable and exempt business, only the VAT appropriate to the taxable business is deductible. Where dual use inputs are used e.g. goods/services used for both a taxable and an exempt activity, a proportion of the VAT may be deducted on the basis of a method of apportionment between taxable and exempt supplies (See the Guide to Apportionment of Input Tax for further details).

VAT credits or deductions on purchases from unregistered farmers

6.11 Registered persons are entitled to claim in their VAT returns a credit or deduction equal to 4.3% (with effect from 1 January, 2001) of the amount, excluding VAT, which they have paid to unregistered farmers in respect of purchases of agricultural produce or agricultural services. A settlement voucher specifying the net purchase price and the 4.3% flat-rate addition as well as the total price must be prepared and retained by the purchaser and a copy given to the farmer. The settlement voucher should issue within fifteen days from the end of the month in which the purchase took place. If there is a subsequent adjustment in the price, the appropriate VAT adjustment must also be made and documented. Persons registered for VAT in other Member States are entitled to a repayment of such flat-rate addition charged to them (see VAT Information Leaflet No. 12/01 for further details). The 4.3% flat-rate addition does not apply to purchases of fish (except from freshwater fishermen or fish farms), the purchase of greyhounds or the purchase of agricultural produce or services supplied by unregistered farmers from other Member States.

VAT deductions by motor dealers

6.12 In addition to the ordinary VAT deductions to which a dealer in motor vehicles is entitled, a deduction of the residual VAT included in the purchase price of a second-hand motor vehicle (including by way of trade-in) is allowed when a dealer purchases such a vehicle from certain sources. An Information Leaflet on the VAT treatment of second-hand vehicles (October 1995) is available.

VAT deductions by dealers in agricultural machinery 6.13 A taxable dealer who purchases agricultural machinery from a flat-rate farmer is, subject to certain conditions, entitled to deduct residual VAT included in the purchase price. Time limit
6.14 The time limit for claiming a repayment of VAT is six years.

25

Chapter 7 Accounting for VAT

This Chapter outlines when VAT becomes payable to the Collector-General, as distinct from when VAT becomes due, as was dealt with in Chapter 6. It also describes how VAT should be accounted for and what types of returns are required from a VAT-registered trader.

When VAT becomes payable

7.1 The general rule is that every VAT-registered trader must, by the 19th day of the month following the end of each two-month taxable period (i.e. January/February, March/April and so on), furnish to the Collector-General on the prescribed form (VAT 3) a true and correct return for the period showing the amount of VAT due by him or her and the amount of VAT deductible by him or her. In addition, traders are also required to provide annually a return on form RTD EUR, which is a return of trading details, purchases and sales for the year, broken down by VAT rate.

Annual returns
7.2 The Collector-General may allow certain traders to make their VAT returns on an annual basis. This facility is absolutely at the discretion of the Collector-General and is not available on application. Qualifying traders will be offered the facility if and when they qualify. Form RTD EUR referred to in paragraph 7.1 must be completed also by these qualifying traders. Traders making annual VAT returns may align the date of the return with the date of their own commercial accounting period.

VAT 3 return form

7.3 A VAT 3 form is issued to each VAT-registered trader towards the end of each taxable period. The name, address and registration number of the trader and the period to be covered by the return are computer-printed on the form. It is most important that the VAT 3 form issued to a trader in respect of a particular taxable period should not be used for any other taxable period, nor should it be used to cover more than one taxable period. Any misuse of the VAT return form in this way can lead to confusion and may result in a payment or claim for repayment not being recorded for the correct taxable period. In no circumstances should a trader (or an accountant/agent acting on a traders behalf) use a VAT return form which was issued in the name of a different trader.

Payment by direct debit

7.4 A trader may pay VAT by direct debit in monthly installments. If a business is seasonal, a trader can vary the amounts paid each month to reflect cash flow. Traders should ensure that the amounts of VAT paid by direct debit are sufficient to cover ongoing liability. Where necessary, a trader should adjust the direct debit amounts to ensure this. At the end of the year, if a shortfall arises, the balance should be included when submitting the annual return of trading. Where insufficient amounts are paid by direct debit and, as a result, the balance of tax payable with the annual return is more than 20% of the annual liability for VAT, then a trader will be liable to an interest charge backdated to the mid point of the year. The relevant

26

forms are available on the Revenue website at www.revenue.ie, or from the Collector Generals Office.

Revenue On-Line Service (ROS)

7.5 ROS is a secure service that enables traders to interact electronically with Revenue. Among other services, ROS provides the facility to file VAT 3 and Return of Trading Details forms online. Traders can register for ROS by accessing the ROS website at www.ros.ie.

How to complete the VAT 3 return

7.6 If the total VAT due exceeds the total VAT deductible, the difference is the amount of VAT payable, and a remittance for this amount together with the completed and signed VAT 3 form should be sent to the Office of the Collector-General. Cheques should be crossed and made payable to the Collector-General. Payment may also be made by Bank Giro and direct debit. If the deductible VAT exceeds the VAT due, the excess shown on the VAT return will be repaid to the registered trader by the Collector-General. This will normally take about ten working days from the date of receipt by the Collector-General of the VAT return form properly completed and signed. All traders must arrange to have repayments made directly into an account in a financial institution. Repayment may be withheld by the Collector-General if VAT returns for other taxable periods are outstanding. Repayments may be delayed if other taxes are outstanding therefore traders should ensure that all is in order in this regard also. Traders in a permanent repayment position may be permitted to furnish monthly returns by arrangement with the local inspector of taxes. If a trader is entitled to a repayment of VAT, and a connected business has failed to make VAT returns or remit VAT due, Revenue may compulsorily group the businesses to ensure that no refund is made where an outstanding liability exists in respect of one or more of the group members.

Interest
7.7 With effect from 1 September 2002, if VAT is not paid within the proper period, interest is chargeable for each day at the rate of 0.0322% per day. This interest also applies where a refund of VAT has been made on the basis of an incorrect return, and where all or part of the tax refunded was not properly refundable.

Estimates, assessments and appeals

7.8 When a trader fails to make a VAT return, Revenue has power to make an estimate of the VAT due. An appeal may be made by the trader concerned only on the grounds that he or she is not a taxable person. The alternative response is for the trader to submit a properly completed VAT return. When a trader makes a VAT return but understates the liability, the inspector of taxes may make an assessment of any further VAT due. Similarly, the Inspector may make an assessment on a trader who obtains a greater refund of VAT than that to which he or she is entitled. Where an assessment is made by an Inspector, an appeal may be made on the grounds that the assessment is excessive.

27

Formal notice of both estimates and assessments is given. The amount of the estimate or assessment is payable unless it is successfully appealed or when properly completed VAT returns are submitted with the corresponding payment, if appropriate. An appeal against an estimate must be submitted in writing to the Collector General within 14 days of service of the formal notice. An appeal against an assessment must be submitted in writing to the inspector of taxes within 21 days (see also paragraph 15.11 of Chapter 15). Payment of an estimate or assessment does not relieve a trader of the obligation to furnish a VAT return. Failure in this latter regard leaves a trader liable to prosecution. The time limit for raising estimates and assessments is normally six years. However, separate time limits apply in a case where estimates and assessments are required in respect of the pre-death liability of a deceased person. The time limit for claiming a repayment of VAT is six years.

When VAT on new vehicles and excisable goods is payable

7.9 VAT in respect of intra-Community acquisitions of certain new means of transport, where the VAT due is not deductible (see paragraphs 6.7 and 6.8 of Chapter 6), is payable with the Vehicle Registration Tax (VRT) or, if no VRT is payable not later than the fifteenth day of the month following that in which the intra-Community acquisition occurs. Similarly, VAT due in respect of excisable goods is normally payable with the excise duty (see paragraph 6.2 of Chapter 6). Special arrangements apply to the supply of alcohol products held under a duty suspension arrangement (see Statement of Practice (SPVAT/3/93)).

VAT as a preferential debt

7.10 VAT is a preferential debt in bankruptcy and in the liquidation of a limited company. VAT payable in respect of the twelve month period prior to the commencement of proceedings in bankruptcy or liquidation ranks equally with most other taxes and certain other preferential debts in priority to all other debts.

Overpayment of VAT/unjust enrichment

7.11 Where an overpayment of VAT arises, for example, as a result of a VAT-registered trader incorrectly applying a higher VAT rate on goods or services supplied, the trader may in the normal course claim a refund of the overpaid VAT from the Collector-General. Such a repayment can be refused where this would lead to the unjust enrichment of the trader in question. Unjust enrichment occurs where a trader would get a windfall gain if refunded tax which was paid in error. This happens where the cost of the overpaid tax was actually passed on to the traders customers in the price of the goods or services. The Collector-General will not normally refund tax which has been charged to the customer. However, where a trader can establish to the satisfaction of Revenue that a loss of business occurred, the trader may apply for a refund of that part of the overpaid tax which would compensate for any associated loss of profits. Where a trader undertakes to reimburse his or her customers, the VAT claimed will be refunded, subject to the trader having made adequate arrangements to reimburse those customers. Any trader who does not reimburse his or her customers within 30 days of receiving a refund must pay back the amount refunded.

28

Chapter 8 Option for the moneys received or cash basis of accounting, and special schemes for estimation of sales by retailers
This Chapter sets out which VAT-registered traders may opt to account for VAT on the basis of moneys received from their customers instead of the normal method based on the issue of invoices to their customers, and how such traders may apply to operate this scheme. It also deals with special schemes for estimation of sales by retailers.

Description of moneys received basis

8.1 Unlike the normal invoice/sales basis of accounting where VAT-registered traders become liable for VAT at the time of issue of invoices to their customers or of sales made by them regardless of whether or not they have received payment from those customers, under the moneys received or cash received basis of accounting, traders do not become liable for VAT until they have actually received payment for goods and services supplied.

Traders who may opt for moneys received basis

8.2 The traders who may opt to account for VAT in this way are:VAT-registered traders whose supplies of goods or services are almost exclusively (at least 90%) made to unregistered persons. This would apply in practice mainly to retail outlets, public houses, restaurants, hairdressers and any similar type of business, or VAT-registered traders whose annual turnover does not exceed or is not likely to exceed 635,000. It should be noted that the use of this basis of accounting in no way removes from a VAT-registered trader his or her obligations as regards the issue of invoices and other documents, the maintenance of records, lodgement of returns etc..

Excluded transactions
8.3 Transactions between connected persons are excluded from the moneys received basis of accounting. VAT on any transactions between such persons must be paid by reference to the normal invoice/sales basis. VAT on property transactions must always be accounted for on the invoice basis.

Procedure
8.4 Any VAT-registered trader who finds that he or she is eligible to use this basis of accounting (as outlined at paragraph 8.2 above) and wishes to use it should apply to the local inspector of taxes for authority to do so. Traders may not change from the invoice/sales basis of accounting to this one, or vice versa, without such authority. Persons who are applying for VAT registration for the first time, and find that they are eligible for this basis of accounting should indicate in the appropriate box on the application form (STR, TR1 or TR2) whether or not they wish to use the moneys received basis.

29

VAT liability on moneys received

8.5 A trader who has opted to account on the moneys received basis is liable for VAT at the rate applicable at the time the goods or services are supplied and not at the rate applicable when payment is received, if a change in rate has taken place in the interim. Moneys received by a VAT-registered trader include any sums credited to the trader s account in a bank, building society or other financial concern, received by a solicitor on the traders behalf, or paid to Revenue by a third party to the traders account in accordance with the Commissioners power of attachment. A VAT-registered trader is also deemed to have received money if liability in respect of a business transaction is settled by setting off against it a credit due in respect of some other transaction. Care must be taken when money is received through an agent that any amount withheld by the agent to cover fees, expenses etc., is included in the taxable amount.

Withholding tax professional services

8.6 Income Tax withheld from payments for professional services is deemed, for VAT purposes, to be part of the consideration received by the trader. If, for example, payment of an amount due to a solicitor is reduced from 1,210 [1,000 + 210 VAT] to 1010 [200 (20% of the amount net of VAT) withheld for Income Tax] the solicitor is deemed for VAT purposes to have received 1,210 and must therefore account for VAT on the full amount of 1,210.

Withholding tax relevant contract tax

8.7 Income Tax withheld from payments to sub-contractors is deemed to be part of the consideration received by the sub-contractor. If, for example, payment of an amount due to a sub-contractor is reduced from 1,210 [1,000 + 210 VAT] to 787 [423 (35% of the gross amount) withheld for Income Tax] the sub-contractor is deemed for VAT purposes to have received 1,210 and must therefore account for VAT on the full amount of 1,210.

Credit card transactions

8.8 In the case of credit card transactions the taxable amount is the total amount actually charged to the customer by the supplier. Amounts withheld by credit card companies from their settlements with traders are part of the taxable amount and should not be disregarded.

Changing from invoice/sales basis to moneys received basis

8.9 Where a VAT-registered trader already accounting for VAT on the invoice basis obtains permission to change to the moneys received basis, that trader is liable for VAT on any moneys received on and after the approved date of the change, excluding any payments on which VAT has already been accounted for in respect of goods and services supplied while accounting on the invoice basis.

30

Changing from moneys received basis to invoice/sales basis

8.10 Where a VAT-registered trader already accounting for VAT on the moneys received basis changes to the invoice basis, or ceases to be a taxable person, liability for VAT at the time of the change must be assessed. Where a person was authorised to account for VAT on the moneys received basis prior to the 28th May 1992, the adjustment is done by comparing the amount of trade debts outstanding at the beginning of the period for which the moneys received basis applied with the amount outstanding at the end of the period in which the change takes place. If the trade debts at the end of that period exceed those at the beginning the trader will be required to pay VAT on the excess at the appropriate rate or rates. The adjustment is based on the increase in value of outstanding trading debts (increase in debtors) for the period of the authorisation or for a period of six years, whichever is the shorter. Where a person was authorised to account for VAT on the moneys received basis after the 28th May 1992, the adjustment for the VAT due must be made by reference to the VAT due on outstanding debtors.

Credit notes
8.11 A VAT-registered trader accounting for VAT on the basis of moneys received must issue to a VAT-registered customer a credit note showing VAT if there is a discount or price reduction allowed subsequent to the issue of an invoice (see paragraphs 9.6 to 9.7 of Chapter 9). The effect of the credit note is to reduce the VAT deduction available to the customer on the basis of the original invoice. This has no effect on the liability of the person issuing the credit note since he or she is calculating liability by reference to the moneys actually received.

Special schemes for estimation of sales by retailers

8.12 Many retailers who have opted to account for VAT on the basis of moneys received may find it difficult to keep exact records of their sales of goods liable at different rates of VAT. In the case of these retailers Revenue are prepared to accept returns of sales, estimated by reference to their purchases, according to approved schemes including a special scheme for retail chemists. Details of the approved schemes, with examples of their application, are given in a booklet (Schemes for Retailers) which may be obtained from Inspectors of Taxes. The schemes may not be applied to turnover from services or to turnover from goods which the retailers themselves have manufactured or processed. The use of a scheme by any retailer is subject to periodic review by the inspector of taxes and the concession may be withdrawn if it is found that the use of any particular scheme has the effect of reducing the proper liability to VAT. The inspector of taxes may make an assessment of any under-charges arising as a result (see paragraph 7.8 of Chapter 7). Use of the schemes is not obligatory, but if they are used it is important to select the scheme appropriate to the annual turnover and stock control system of the business and to move to the correct scheme if circumstances change. Where mark-up rates are involved in the operation of the scheme, a trader should apply the rates of mark-up being applied in the business to each VAT category.

31

Chapter 9 Invoices, credit notes etc.

This Chapter sets out the rules relating to the issue of invoices, credit notes and other documents and outlines the importance of these documents in the operation of the VAT system.

Importance of invoices and credit notes

9.1 The information given on invoices and credit notes normally establishes the VAT liability of the supplier of goods or services and the entitlement of the customer to a deduction, where applicable, for the VAT charged. It is therefore vital that these documents are properly drawn up and carefully retained. The checking of these documents forms a most important part of the periodic examination which Inspectors of Taxes make of a traders VAT position. VAT law lays down specific requirements for the issue and retention of invoices, credit notes and related documents. Failure to comply with these requirements leaves a trader liable to prosecution and to penalties. Traders who issue invoices and credit notes, and persons to whom these documents are issued, should ensure that the documents accurately represent the transactions to which they refer. Failure to do so may have serious consequences for all parties concerned. If, for example, a wholesaler issues an invoice describing as zero rated, goods which are in reality taxable at the standard rate of 21%, the wholesaler is nonetheless liable for VAT at the 21% rate and also by his or her action is open to prosecution. The retailer is likewise liable at the 21% rate of VAT on the subsequent supply, despite the misleading description and is open to prosecution should he or she account at the incorrect rate. In the same way, invoices must accurately represent a suppliers charge whether the supply is an outright sale, a hirepurchase or any other transaction. In the case of hire-purchase transactions, a taxable person is entitled to claim a VAT deduction on the strength of a document or payment schedule setting out the VAT payable from a finance house instead of the VAT invoice subject to the normal VAT deductibility rules.

Form of VAT invoice

9.2 A taxable person who supplies taxable goods or services to another taxable person is obliged to issue a VAT invoice showing the following particulars:the name and address of the trader issuing the invoice; the traders VAT registration number; the name and address of the customer; the date of issue of the invoice; the date of supply of the goods or services; a full description of the goods or services; the quantity or volume of the goods supplied; the consideration exclusive of VAT expressed in euro

32

the rate (including zero rate) and amount of VAT at each rate. A trader who makes zero rated intra-Community supplies is obliged, in addition to the above, to show the VAT registration number of the customer in the other EU Member State. A person engaged in EU triangular transactions must also include on the invoice an explicit reference to the EU simplified triangulation arrangements (see paragraph 11.7 of Chapter 11). It should be noted that a taxable person is required if requested in writing to issue a VAT invoice in respect of a transaction with an unregistered person in the State who is entitled to a repayment of the VAT. A taxable person is not required to issue a VAT invoice to an unregistered person otherwise, but may do so if he or she so wishes.

Time limit for issuing a VAT invoice

9.3 If a VAT invoice is required to be issued, it must be issued within fifteen days of the end of the month in which goods or services are supplied. Failure to issue an invoice in time leaves a trader open to prosecution.

Settlement vouchers and debit notes

9.4 Where settlement vouchers and debit notes are used instead of invoices and credit notes, as is often the case with commercial transactions, these documents must contain also the VAT registration number, if any, of the person issuing them and the VAT registration number of the supplier, in addition to all the other details required to be shown by a trader on invoices and credit notes. It is also a condition that the supplier of goods or services be prepared to accept such documents. If accepted, the supplier is subject to the same obligations as if he or she had issued an invoice or credit note.

Increase in invoiced amounts

9.5 Because the amount of VAT shown on an invoice affects the VAT liability of both the VATregistered supplier and the VAT-registered customer, any change in the amount of VAT payable or deductible on an invoice must be properly vouched. If, subsequent to the issue of an invoice, the amount charged is increased, a supplementary invoice must be issued by the supplier on which the increase in the charge and the appropriate VAT must be shown.

Decrease in invoiced amounts

9.6 When the amount of VAT payable as shown on an invoice is reduced because of an allowance or discount or similar adjustment, the person who issues the VAT invoice must issue a credit note stating the amount of the reduction in the price and the appropriate VAT (but see paragraph 9.7). The trader (supplier) may then reduce his or her liability by the amount credited in the accounting period in which the credit note is issued, and the recipient must increase his or her liability by the same amount. All credit notes must contain a reference to the corresponding invoices. Where the trader (supplier) is accounting for VAT on the moneys received basis, a credit note showing VAT must always be issued. No reduction in the suppliers VAT liability may be made on this account. The VAT deduction or credit available to the customer on the basis of the original invoice is reduced as a result of the issue of the credit note.

33

Where a credit note is not required

9.7 Where a VAT-registered supplier on the invoice/sales basis and a VAT-registered customer agree in respect of a transaction not to make any change in the VAT shown on the original invoice, even though the price charged may subsequently be reduced, there is no obligation to issue a credit note in respect of the VAT. Such a practice saves trouble for both seller and purchaser. If discount, for example, is taken by the purchaser on the VAT as well as on the price, a credit note must be issued by the seller and, if the seller is accounting for VAT on the sales or invoice basis, the seller must then adjust his or her VAT liability downwards and the customer must adjust his or her VAT liability upwards. Where the discount is taken only on the goods, and the amount of VAT originally invoiced is allowed to stand, no adjustment for VAT is necessary and a VAT credit note is not required.

Incorrect amounts of VAT invoiced

9.8 A VAT-registered trader who issues an invoice showing a greater amount of VAT than is correct for the transaction is liable for the whole amount of VAT invoiced. If the trader issues a credit note showing a lesser amount of VAT than is proper, he or she is liable for the deficiency. In either case the trader may also be liable to penalties.

Payments received in advance

9.9 Where payment in full or by instalments for goods or services supplied to a VAT-registered person is made before the completion of the supply, the person receiving payment must issue an invoice in the proper form not later than the 15th day of the month following that during which each such payment was received. This does not apply in the case of intra-Community supplies of goods (see Chapter 11).

Invoices issued by unregistered persons

9.10 Where an invoice showing an amount of VAT is issued by a trader not registered for VAT, that trader is liable for the VAT shown on the invoice and is also liable to prosecution.

Electronic (paperless) invoices etc.

9.11 It is open to traders to operate an electronic invoicing system provided the particulars to be contained in such invoice or other document are recorded, retained and transmitted electronically by a system which ensures the integrity of those particulars and the authenticity of their origin in accordance with regulations.

Invoices, credit notes etc. issued in foreign currency

9.12 Invoices issued for VAT purposes in amounts expressed in foreign (non-euro denominated) currency must contain the corresponding figures in euro. The copy of the invoice which is required to be retained must show the same figures. This applies also to credit notes etc.

34

Converting foreign currency invoices

9.13 The latest selling rate recorded by the Central Bank at the time the VAT becomes due should

be used when converting foreign currency invoices. In practice the Central Bank rates for most major currencies appear on a daily basis in the newspapers. It is possible, by agreement with Revenue, to use an alternative method of determining the exchange rate, i.e. the rate determined on a calendar month basis under the monthly rate of exchange system for customs valuation purposes, subject to the condition that the agreed method must be used in respect of all the traders foreign currency transactions. Traders who wish to avail themselves of this facility should write to their local inspector of taxes indicating the exchange rate method they propose to use.

35

Chapter 10 Records to be kept

This Chapter sets out the VAT record-keeping requirements that must be complied with by all traders.

General
10.1 A VAT-registered trader must keep full and true records of all business transactions which affect or may affect his or her liability to VAT. The records must be kept up to date and must be sufficiently detailed to enable a trader to accurately calculate liability or repayment and also to enable the inspector of taxes to check the calculations, if necessary. Advice on record keeping is available from the Inspectors of Taxes.

Records of purchases
10.2 The records of purchases should distinguish between purchases of goods intended for resale and goods or services not intended for resale in the ordinary course of business. The record should show the date of the purchase invoice and a consecutive number (in the order in which the invoices are filed), the name of the supplier, the cost exclusive of VAT and amount of VAT shown. Purchases at each rate must be recorded separately. The same information should be recorded in respect of imports, intra-Community acquisitions and services received.

Sales records
10.3 In general the record of sales must include the amount charged in respect of every sale to a registered person and a daily entry of the total amount charged in respect of sales to unregistered persons, but see however paragraph 8.12 of Chapter 8 dealing with Special Schemes for retailers, distinguishing in all cases between taxable transactions liable at each different rate of VAT(including the zero rate) and exempt transactions. All such entries should be cross-referenced to relevant invoices, sales dockets, cash register tally rolls, delivery notes etc. A balanced cash book is essential for trouble-free operation of VAT. Persons who are authorised to account for VAT on the basis of moneys received are not relieved of the obligation to retain any documents they use for the purposes of their business. Persons involved in intra-Community trade also have requirements in relation to retention of records as regards certain transfers of goods to other Member States (see Chapter 11 for further information).

Discounts and price reductions

10.4 Discounts or reductions made or received, and affecting the amount charged, should be recorded in the same manner as purchases and sales.

36

Retention of records by taxable persons

10.5 A taxable person must retain all books, records and documents relevant to the business, including invoices, credit and debit notes, receipts, accounts, cash register tally rolls, vouchers, VIES and intrastat returns, stamped copies of customs entries and other import documents and bank statements. These business records must be preserved for six years from the date of the latest transaction to which they refer unless the written permission of the inspector of taxes has been obtained for their retention for a shorter period.

Retention of records by non-taxable persons 10.6 Persons who carry on business, even though they may not be taxable persons, must for Vat
purposes keep all invoices issued to them in connection with the business and copies of customs entries in respect of goods imported.

Microfilmed records 10.7 Copies of original records produced by microfilming or other copying process cannot be accepted. Electronic invoicing and storage
10.8 A trader who issues or receives electronic invoices etc. must retain and store them and related electronic records. In addition they must store details such as the form of encryption, electronic signature and details of the format in which they can be accessed in accordance with regulations.

Inspection of records
10.9 Authorised Revenue officers have extensive powers in regard to the inspection of records and failure by traders or their employees or associates to co-operate with the officers is an offence. These officers will have proof of their identity. They will check the traders VAT returns against their records and they will cross check invoices against the suppliers and customers records. Returns for VAT will also be checked against the trading accounts submitted for Income and Corporation Tax purposes.

37

Chapter 11 Intra-Community supplies

This Chapter outlines the procedures to be followed when conducting trade between different Member States of the EU. It refers in particular to supplies made by VAT-registered traders in this State to customers in other Member States.

Single Market
11.1 Following the introduction of the Single Market on 1 January, 1993, the way in which VAT was charged on goods moving between Member States of the EU was changed. The concept of import and export was abolished for such trade and replaced by a system of intraCommunity supply and acquisition of goods. The VAT treatment of most services supplied to traders in other Member States did not change, however there were important changes relating to intra-Community goods transport and related services (see paragraph 11.13 below).

Supplies of goods to other Member States

11.2 The supply of goods by a VAT-registered trader in one EU Member State to a VAT-registered trader in another EU Member State normally qualifies as an intra-Community supply. A VATregistered trader in the State may zero rate the supply of goods to a customer in another EU Member State if the customer is registered for VAT in that other EU Member State, the customers VAT registration number (including country prefix) is obtained and retained in the suppliers records, this number, together with the supplier s VAT registration number, is quoted on the sales invoice, the goods are dispatched or transported to that other EU Member State. If these four conditions are not met the supplier is liable for VAT at the appropriate Irish rate. If the supplier is not able to satisfy the inspector of taxes that particular consignments of goods have been sold and delivered to a VAT-registered person in another Member State, the supplier becomes liable for the payment of Irish VAT on the transaction. Where any of the above four conditions are not satisfied the seller should charge Irish VAT. If the conditions for zero-rating are subsequently established the customer is entitled to recover the VAT paid from the supplier. The supplier can then make an adjustment in his/her VAT return for the period. A detailed VAT Information Leaflet No. 26/01 on the zero-rating of intra-Community supplies is available. Sales of goods by Irish-registered traders to unregistered persons in other Member States are liable to Irish VAT. There are, however, a number of exceptions, i.e. distance selling (including mail order), sales of excisable goods and of new means of transport. These are described in the following paragraphs.

38

Certain transfers are not supplies

11.3 For VAT purposes, certain transfers to other Member States are not treated as intraCommunity supplies/acquisitions. These include goods for installation or assembly by the supplier (in this case the supplier must register for VAT in the Member State in which the goods are installed), transfers of goods for the purposes of having contract work carried out and transfer with a view to their temporary use in another Member State.

Branch to branch transfers of goods

11.4 For VAT purposes, branch to branch (with some exceptions) and similar transfers of goods between business persons in different EU Member States are treated as being intraCommunity supplies and acquisitions.

Sale of new vehicles to persons in other Member States

11.5 Sales of new means of transport, i.e. motor vehicles, boats, aircraft etc., are excluded from the distance selling arrangements. These sales are always intra-Community acquisitions and any person acquiring a new means of transport must always pay VAT in the EU Member State of arrival. For a dealer selling a new means of transport to a person registered for VAT in another EU Member State, the VAT treatment is the same as that which applies to goods generally (see paragraph 11.2). In the case of the sale of a new vehicle, for example, to a private individual in another EU Member State, VAT is ultimately payable in the EU Member State of arrival. If the private individual collects the vehicle in the State, VAT should be charged by the dealer. However, once the customer satisfies the dealer that VAT has been paid in his or her own EU Member State, the dealer should refund the VAT charged to the customer and adjust the VAT liability accordingly. The dealer should retain documentary proof. The normal level of proof required is a copy of the receipt of VAT payment and proof of registration of the vehicle in the other EU Member State.

What is a new means of transport?

11.6 The following table sets out what is regarded as being a new means of transport for VAT purposes:

Means of Transport
Motor Vehicle

Specification
Over 48cc or over 7.2 kw power Over 7.5 metres in length

New
6 Months old or less or travelled 6,000 k.m. or less 3 months old or less or sailed for 100 hours or less 3 months old or less or flown for 40 hours or less

Vessels

Aircraft

Over 1,550 kg take-off weight

39

Triangular transactions
11.7 Triangulation in the Single Market involves two supplies of goods between three VATregistered traders in three different EU Member States e.g. where a trader in one Member State orders goods from a trader in a second Member State, to be delivered to a trader in a third Member State. To reduce the administrative and compliance burdens on traders and the relevant tax authorities with regard to registration and accounting, a simplification measure is in operation in such cases. A technical note on the VAT treatment of triangulation in the Single Market is available on request.

Verification of customers VAT numbers

11.8 For zero-rating to apply there must be a supply of goods to a person registered for VAT in another Member State. The fiscal authorities in each Member State have put in place a computerised system that makes it possible for traders to verify the VAT numbers of their customers in other Member States. However, use of the verification system is not obligatory and traders who are familiar with their customers, and are aware of their bona fides from trading with them over a period of time, are not expected or required to use the verification system. Instead they are advised to contact their EU customers and ask them to confirm in writing their VAT registration numbers. An Irish trader who has doubts about the validity of a VAT number quoted may use the verification system to establish whether or not a particular number is valid. The system is primarily intended to be used in such circumstances and is not intended for routine checks. Verification of queries is dealt with by the VIMA Office. (See appendix J for contact details)

EU Commission database of VAT numbers

11.9 It is possible to verify the format only of any given VAT number in the EU by accessing the EU Commission database at www.europa.eu.int/vies.

Fraudulent claims for zero-rating

11.10 There are severe penalties for making fraudulent claims for zero-rating: (i) seizure and forfeiture of zero rated goods which have not been dispatched or transported outside the State,

(ii) a person who acquires goods VAT free in another Member State as a result of making a declaration of an incorrect VAT registration number shall be liable to a penalty of 630 plus an amount equal to the amount of tax which would have been chargeable, (iii) arrest of a person suspected of a criminal offence who is not established in the State, or whom an authorised Revenue Officer or a Garda has reason to believe may leave the State, (iv) civil and criminal penalties, ranging from 1,520 to 126,970 and imprisonment for a period of up to five years.

Mail order and distance selling

11.11 Distance selling in the Single Market occurs when a supplier in one EU Member State sells goods to a person in another EU Member State who is not registered for VAT and the supplier

40

is responsible for the delivery of the goods. It includes mail order sales and phone or telesales but does not include sales of new means of transport (see paragraphs 11.5 and 11.6 above) or excisable goods (see paragraph 11.12 below). An Irish supplier who makes distance sales to customers in other EU Member States who are not registered for VAT, is liable to Irish VAT on such sales until the value of the sales reaches the threshold applying in that other EU Member State (see table following). Once the value of the suppliers sales exceeds the threshold in a calendar year in the other EU Member State, the supplier will be obliged to register in that EU Member State and account for VAT at the rates applicable there. If the appropriate threshold is not exceeded, the supplier may, nevertheless, opt to account for VAT in the EU Member State to which the distance sales are made. A VAT Information Leaflet No. 8/01 on the treatment of distance sales is available. 35,000 Belgium Denmark Greece Ireland Portugal Spain Italy Finland Sweden 100,000 France Germany Luxembourg Netherlands United Kingdom Austria

Excisable goods
11.12 Any supplier who makes distance sales of excisable goods to another Member State must register in that EU Member State, because distance sales of excisable goods will always be subject to VAT in the EU Member State of arrival.

Intra-Community goods transport services

11.13 There are special rules relating to the VAT treatment of intra-Community goods transport services. In practice, these rules mean that an Irish VAT-registered transporter supplying intra-Community goods transport services to an Irish VAT-registered customer charges Irish VAT. An Irish VAT-registered transporter supplying intra-Community goods transport services to a person registered for VAT in another EU Member State does not charge VAT and the customer accounts for VAT on the service, in that other EU Member State, through his or her VAT return. Goods transport services supplied to a person who is not registered for VAT in any EU Member State (e.g. a private individual) are taxed where the transport begins. Similar arrangements apply for related ancillary services, e.g. loading, unloading, handling etc. subject to certain conditions. A VAT Information Leaflet No. 16/01 on the treatment of these transport and ancillary services is available. Given the relatively complex nature of the rules, any VAT-registered trader who intends to engage in this area of transport and ancillary services is strongly advised to read this VAT Information Leaflet.

41

VIES returns
11.14 When an Irish VAT-registered trader makes zero rated supplies of goods to a trader in another EU Member State, summary details of those supplies must be returned to Revenue on a quarterly or monthly basis. This return, known as the VIES return, is to enable the authorities in each EU Member State to ensure that intra-Community transactions are properly recorded and accounted for.

INTRASTAT returns
11.15 Traders engaged in intra-Community trade are also obliged to make a periodic INTRASTAT return, for statistical purposes, where the value of goods acquired by them from other Member States exceeds 190,500 per annum or the value of goods supplied by them to other EU Member States exceeds 635,000 per annum. Further information on the VIES and INTRASTAT returns is available from the VIMA Office, Newry Road, Dundalk, Co. Louth. - phone number (042) 9326262 or LoCall 1890 251010, or by email to [email protected].

42

Chapter 12 Acquisitions from other Member States

As well as Chapter 11, this Chapter also outlines the procedures to be followed when conducting trade between different Member States of the EU. This Chapter, however, refers in particular to supplies made by traders from other Member States to customers in this State.

Acquisitions from other Member States

12.1 As already indicated in Chapter 11, with the introduction of the Single Market on 1 January, 1993, the concept of importation of goods from other EU Member States was replaced by the concept of intra- Community acquisition of goods. VAT is no longer payable on such acquisitions at the point of entry but is accounted for under the system of postponed accounting. Under this systemthe taxable person becomes liable for VAT on the acquisition of the goods, the taxable person declares a liability for VAT in the VAT return, if the taxable person is entitled to full deductibility (input credit), the VAT payable on the intra-Community acquisition is deducted in the same VAT period, thus effectively cancelling out the VAT liability (see also Chapter 6), and the taxable person accounts for VAT on any subsequent supply of the goods in the appropriate VAT return. Postponed accounting is the mechanism by which a taxable person in the State accounts for the VAT charge which arises in respect of goods acquired from another Member State. A detailed VAT Information Leaflet No. 7/01 on the postponed accounting system is available.

Postponed Accounting with full deductibility

12.2 A person registered for VAT in the State can buy goods in another Member State at the zero rate provided the goods are dispatched or transferred to him/her in the State. The taxable person is required to account for VAT on any intra-Community acquisition of the goods on arrival in the State, at the appropriate Irish VAT rate. Where the taxable person is entitled to full deductibility, a simultaneous input credit may be taken thus cancelling the liability. The treatment of taxable persons who are not entitled to full deductibility is dealt with in paragraphs 12.4 and 12.5 below.

Liability for onward supply

12.3 If the goods acquired are subsequently supplied, liability on that supply will arise in the normal way in the period in which the supply is made.

43

Partially exempt persons

12.4 As outlined above taxable persons with full deductibility can take a simultaneous credit for any VAT liability on intra-Community acquisitions. However, a number of taxable persons are registered for VAT but do not have full input tax deductibility e.g. a bank primarily involved in exempt activities but which also carries on a taxable activity such as leasing of movable goods. Where such persons acquire goods in another Member State, they are liable to VAT on the acquisition of these goods but may not be entitled to a simultaneous deduction. The making of intra-Community acquisitions does not affect the persons existing input tax deductibility entitlements. The taxable person is required to account for VAT on any intraCommunity acquisition, at the appropriate Irish VAT rate, for the period in which the goods were acquired. However, the extent to which this VAT may be simultaneously deducted varies.

Deductibility and apportionment

12.5 A full deduction of the VAT on the intra-Community acquisition arises if the goods are wholly attributable to a persons taxable activities. No deduction of the VAT is allowable if the intraCommunity acquisition relates to a persons exempt activities. If the intra-Community acquisition is used for both types of activity i.e. dual use inputs, the tax should be deducted in accordance with the taxable persons existing apportionment arrangements (see Guide to Apportionment of input VAT).

Transfers
12.6 For VAT purposes, branch to branch (with some exceptions) and similar transfers of goods between business persons in different EU Member States are also treated as being intraCommunity supplies and acquisitions. A VAT Information Leaflet No. 7/01 is available. The transfer of goods to another Member State for the purposes of having contract work, repair or valuation work carried out on them and which are subsequently returned to the State are not treated as intra-Community supplies or acquisitions (see also paragraph 4.10 of Chapter 4).

Calculation of VAT due on intra-Community acquisitions

12.7 VAT becomes due on the date of issue of the invoice or, if no invoice issues, on the fifteenth day of the month following the acquisition. In general the rate of VAT applicable is the rate that applies to the supply of similar goods in the State. (The one exception to this is in the case of the intra-Community acquisition of certain goods listed in Appendix F.) The VAT is assessed on the price charged for the goods. If the suppliers invoice is in a foreign currency, the rate of exchange applicable when the VAT becomes due should be used (see also paragraph 9.13 of Chapter 9).

Persons required to register solely because of intra-Community acquisitions

12.8 Wholly exempt businesses (e.g. insurance companies, building societies etc.) and nontaxable entities (e.g. public authorities, hospitals, charities etc.) are required to register for VAT in respect of their intra-Community acquisitions where the value of these exceeds or is likely to exceed 41,000 per annum. Such bodies must account for VAT on their intraCommunity acquisitions, through their VAT returns, at the appropriate rate. They are not entitled to any deduction in relation to the intra-Community acquisition or any other VAT that they have paid on purchases or imports. VAT Information Leaflets on the VAT treatment of non taxable entities No.11/01 and exempt businesses No. 13/01 are available.

44

Intra-Community acquisitions by farmers

12.9 Farmers are also obliged to register for VAT where their intra-Community acquisitions exceed or are likely to exceed 41,000 per annum. However, farmers registered in respect of their acquisitions may opt to retain their flat-rate status for the purpose of obtaining the 4.3% flatrate addition on their agricultural supplies to VAT registered persons. A detailed VAT Information Leaflet No. 12/01 is available.

Racehorse trainers
12.10 Similarly, a flat-rate farmer who is registered for VAT in respect of racehorse training, who is obliged to account for VAT on intra-Community acquisitions may retain flat-rate farmer status for all agricultural purposes, other than racehorse training.

Acquisitions of new means of transport

12.11 The purchase of new means of transport in other Member States by private individuals and taxable persons is subject to VAT in the country of arrival. Details of what is regarded as a new means of transport for VAT purposes are set out in the table in paragraph 11.6 of Chapter 11.

Time when VAT becomes payable on new means of transport

12.12 In the case of private individuals and taxable persons who are not entitled to a VAT deduction, VAT on the acquisition of a new motor vehicle is normally payable with the Vehicle Registration Tax (VRT) or, if no VRT is payable, see paragraph 6.2 of Chapter 6. In the case of new vessels and aircraft, VAT becomes payable to the relevant Collector of Customs and Excise not later than three days after the date of arrival in the State. Taxable persons who are entitled to a VAT deduction on the acquisition of a new means of transport (see Chapter 6) must account for the VAT through their VAT return.

Intra-Community transport of goods

12.13 The special arrangements relating to the intra-Community transport of goods are dealt with in paragraph 11.13 of Chapter 11. A VAT Information Leaflet No. 16/01 is available.

INTRASTAT returns
12.14 Traders acquiring more than 190,500 worth of goods per annum are also obliged to submit a periodic INTRASTAT return (see paragraph 11.15 of Chapter 11).

Intra - Community hire- purchase agreements

12.15 Where goods are acquired from another Member State for supply by an Irish Finance company under a hire purchase agreement to a taxable person acting as such in the State, then the taxable person is liable to account on the intra-Community acquisition of the goods.

45

Chapter 13 Imports
This Chapter outlines the procedures to be followed when importing goods and services from outside the EU.

General
13.1 For VAT purposes, imports are goods arriving from non-EU countries. In this context it should be noted that certain other territories, (for example the Canary Islands and Channel Islands) are regarded as not being part of the EU for VAT purposes. As a general rule, imported goods are liable to VAT at the same rate as that which applies to the sale within the State of similar goods. (The one exception to this is in the case of the importation of certain goods listed in Appendix F.) Accordingly, goods which are liable to VAT at a positive rate on sale within the State (most goods) are liable to VAT at a positive rate at importation and goods which are zero rated on sale within the State (for example, most food, childrens clothing, books etc.) are zero rated at importation.

When is VAT not payable on goods at importation?

13.2 Where goods are imported and placed, without payment of customs duty in a free zone (see paragraphs 13.15 and 13.16 below) for further details regarding Shannon and Ringaskiddy), under Customs warehousing arrangements, or inward processing (suspension) arrangements, or processing under customs control arrangements, under temporary importation arrangements (e.g. temporary import of a motor vehicle from outside the EU, goods imported for exhibitions, professional equipment imported by nonresidents etc.), or under external transit arrangements or transhipment arrangements. VAT at importation is not payable unless and until the customs duty becomes payable on the goods in the State. VAT is also not payable in the case of certain importations where the goods qualify for permanent admission without payment of customs duty. Examples include used personal and household effects imported on transfer of residence, wedding presents not exceeding a unit value of 1,000 on transfer of residence on marriage, goods within travellers personal luggage allowances etc.. VAT at importation is not payable in respect of imported alcohol products placed under an excise duty suspension regime (e.g. excise warehouse) provided the goods are subsequently supplied while held under that regime. A detailed Statement of Practice on the special arrangements applying to the supply of alcohol products held under excise duty suspension arrangements is available (SP-VAT/3/93).

46

VAT 13A Scheme

13.3 A trader who derives 75% or more of annual turnover from zero rated intra-Community supplies of goods or from exports of goods may apply to have most goods and services received by him or her and intra-Community acquisitions and imports made by him or her zero rated (see also paragraph 15.3 of Chapter 15). A detailed VAT Information Leaflet No. 21/01 is available.

VAT-free importation of goods destined for another Member State

13.4 Where goods are imported from outside the EU into Ireland but are consigned to the importer in another EU Member State, the zero rate of VAT applies. The onward movement of the goods from Ireland to the other EU Member State is a zero rated supply for VAT purposes and the goods are treated as an intra-Community acquisition on arrival in that other EU Member State. The application of the zero rate on import applies only where the Customs authorities are satisfied as to the bona fides in any particular case; and the importer is registered for VAT in the State; and the importer or his or her agent completes an appropriate declaration regarding the consignment and gives an undertaking to comply with the necessary requirements (VIES etc.) regarding the onward supply to the other EU Member State.

Valuation for VAT purposes

13.5 The value of imported goods for the purpose of Value-Added Tax is their value for Customs purposes increased by (i) the amount of any duty or other tax (but not including Value-Added Tax) payable in relation to their importation; and

(ii) any transport, handling and insurance costs between the place of introduction into the EU and the State; and (iii) onward transportation costs to the place of final destination, if known, at the time of importation.

Customs value declared in a foreign currency

13.6 When the customs value of imported goods is expressed in a foreign currency, the amount in question is converted to Euro () in accordance with EU rules. The rate of exchange to be used is the rate determined on a calendar month basis under the monthly rates of exchange system for customs valuation purposes. Information regarding monthly rates of exchange is available from any Customs Office.

Deferred payment
13.7 A general provision exists under the deferred payment scheme for deferment of payment of VAT to the 15th. day of the month following the month in which VAT becomes due. The essential feature of the scheme is that the Collector of Customs and Excise, Automated Entry Processing (AEP), with the authority of the debtor, initiates payment by the issue of a direct debit voucher drawn on the debtors bank. Details are available from the Customs and Excise, AEP Bureau, Ship Street Gate, Dublin Castle, Dublin 2 (Tel. (01) 6475000).

47

Importers and agents wishing to participate in the deferred payment scheme must make application to the Collector of Customs and Excise, AEP. Debit arrangements may be made with the Collector to cover all import points subject to the allocation of a portion of the bank guarantee to the proposed Collections and Stations of importation. Where alterations in allocations are required, at least 14 days written notice must be given by an importer to the Collector in whose area the guarantee is held. In urgent cases the Collector may be able to facilitate the importer more promptly.

Clearing taxable goods through Customs

13.8 Whether or not an importer qualifies for the deferred payment facility (in his/her own right or through an agent) an import declaration must be made to customs either on the Single Administrative Document (SAD), supported by an invoice and any other documents required or electronically by Direct Trader Input (DTI), before imported goods can be released. If the importer is not entitled to the deferred payment facility, VAT must be paid (but see paragraph 13.3). If the importer is entitled to the deferred payment facility or is availing of the agents entitlement in this regard, the relevant authorisation number should be quoted.

The importance of quoting VAT numbers correctly

13.9 It is of the utmost importance that an importer should quote his or her VAT number correctly on import declarations. Where an importer is using the services of an agent, the importers VAT number, not the agents VAT number, should be quoted on the import declaration. Failure to do this may result in delay in making repayments and generate unnecessary queries and correspondence in relation to payments. Even if imported goods are not liable to VAT, the importers VAT number must be quoted on the import declaration. Where a group registration exists and associated companies or branches of companies are separately registered for VAT, the number of the importing company or branch should always be used, not the number of the remitter. Where an importer is not registered for VAT, the words not regd. must be entered in the VAT number box on the import declaration.

Credit in VAT returns for VAT on imported goods

13.10 A VAT-registered trader is entitled to take credit in the VAT 3 return for VAT paid in respect of goods imported for his or her business in the taxable period concerned subject to the normal restrictions (see paragraph 6.7 of Chapter 6). For example, a VAT- registered trader who qualifies for the deferred payment facility and who imports goods in, say, January and February will pay the VAT due on the January imports on 15 February and the VAT due on the February imports on 15 March while claiming a credit for such VAT in the January/February VAT return. A trader must retain evidence in the form of either the Single Administrative Documents (SAD) or the monthly listings produced in connection with the Direct Trader Input (DTI) system.

Parcel post importations of taxable goods

13.11 VAT is not payable at the time of importation by a VAT-registered trader on parcel post importations of taxable goods for the purposes of his or her business provided the value of each such consignment is 260 or less. However, VAT must be accounted for by the trader in box T1 of the VAT 3 return for the period. A trader entitled to input credit will be able to set off against this amount in box T2 of the return any VAT deductible in respect of the parcel (see Chapter 6). Importers of taxable goods should advise their foreign suppliers to quote the

48

importers VAT registration number on the customs declaration form or on the wrappers of green label packets.

VAT on parcel post importations of goods exceeding 260 in value or of spirits, wine or tobacco
13.12 Where the value of taxable goods imported in any one consignment exceeds 260, tax is chargeable at import. It should be noted that a customs declaration is required where the value of spirits, wine or tobacco products in one parcel or consignment exceeds 65 or where the total charges on a parcel or consignment which contains some spirits, wine or tobacco amount to or exceed 260. For consignments or parcels that do not contain spirits, wine or tobacco an import declaration is required if the value of goods in one consignment exceeds 650 in value. It is important for the purposes of reconciliation of traders VAT returns and official records, especially in relation to repayments, that VAT numbers be fully and accurately quoted on the import declaration to Customs.

Payment of VAT by foreign sender (F.D.D.)

13.13 Under the system known internationally as Franc de Droits (F.D.D.) it may be possible for a sender in a non-EU country to pay the VAT and duty chargeable on goods dispatched by post to this country. The VAT will be transferred to the Customs authorities in this country through An Post to whom enquiries on this matter should be made.

Import and export services

13.14 The zero-rating for services related to the import and export of goods (see paragraph (iv), Appendix B) is regarded as covering such items as shipping from outside the EU, quay rent, demurrage and storage rent on imported goods in an approved bonded transit shed or area, labour charges for stripping or stuffing groupage containers for customs clearance or for sampling or examining cargo, payment for customs attendance and harbour dues.

Shannon customs-free airport 13.15 Goods brought into Shannon customs-free zone from outside the State by a VATregistered trader are zero rated.
Goods supplied subject to a condition that they are to be transported to a VAT- registered trader who is trading within the customs-free airport by a VAT-registered trader from outside the airport qualify for zero-rating. Proof of delivery will be required. Goods supplied by a VATregistered trader who is trading within the customs-free airport to another VAT-registered trader who is trading within the airport also qualify for zero-rating. Taxable goods supplied outside the customs-free airport by a VAT-registered trader trading in the customs free airport are always liable to VAT. VAT-registered traders within the customsfree area are liable to account for VAT on non-deductible goods acquired free of VAT (see paragraph 6.7 of Chapter 6). Goods brought into another part of the State from the customs-free airport will not be liable to VAT if they have already been taxed. Goods will already have been taxed if they are supplied by a VAT-registered trader trading in the customs-free airport to anyone other than another VAT-registered trader trading in that area.

49

Firms operating within the duty-free area are regarded as taxable persons and are required to register and to make returns for VAT in the usual way. They are entitled to have goods supplied to them within the customs free area at the zero rate by quoting their registration numbers and declaring that they are trading within the duty-free zone. In the case of goods such as cars and petrol, the VAT on which is generally not deductible, these firms are liable to account for VAT on any such goods acquired free of VAT (see paragraph 6.7 of Chapter 6).

Ringaskiddy free port

13.16 Goods imported by a VAT-registered trader may be delivered or removed direct to Ringaskiddy free port without payment of VAT chargeable at importation provided thatthe VAT-registered trader is a person who has been granted a licence under the Free Ports Act to carry on a trade, business or manufacture within the free port, and the goods are being imported for the purpose of that trade, business or manufacture in the free port. The exemption from import VAT does not extend to food, drink, motor vehicles or petrol, unless the import VAT would, if it were paid, be fully deductible. It should be noted that goods imported free of VAT under these free port provisions may not be subsequently removed from the free port except as a result of a supply to a non-related party (unless Revenue otherwise permit).

50

Chapter 14 Exports
This Chapter describes exports and outlines the requirements to be complied with by VAT-registered traders when goods are sent outside the EU.

What are exports?

14.1 For VAT purposes, exports are goods directly dispatched to a destination outside the EU. In this context, it should be noted that, for VAT purposes, certain territories (for example, the Canary Islands and the Channel Islands) are regarded as outside the EU. The zero rate of VAT applies to all exports. A number of export type transactions and related services are also zero rated, as are supplies of goods to VAT-registered traders in the Shannon Customs-free airport and Ringaskiddy free port.

Purchases of goods by visitors and other travellers - Retail Export Scheme

14.2 Foreign visitors who reside permanently outside the EU, or EU residents who are going to a place outside the EU for a continuous period of not less than twelve months, are entitled to relief from VAT on purchases of most goods (but not services) taken away by them, or consigned to non-EU destinations. The main conditions for relief are the goods must be exported within three months from the end of the month of purchase in the personal baggage of the visitor/purchaser, an invoice showing full particulars of the transaction must be drawn up by the supplier, certified by the Customs authority at the final place of departure from the EU and returned to the supplier by the purchaser, the supplier must be registered for VAT and must satisfy himself or herself that the purchaser is entitled to relief under this scheme. Putting the supplier in possession of the Customs certified documents is an essential part of the scheme. The scheme operates in two principal ways. Either the visitor pays the tax when making purchases and subsequently gets a refund from the relevant retailer or refund agency on return of the certified documents or, in certain retail outlets the visitor receives the goods VAT free from the retailer and subsequently returns the certified documents to the relevant retailer. In the latter case the retailer will be liable for the appropriate VAT if the documentation is not returned. At the standard rate of VAT, this scheme represents a reduction of 17.36% on the normal sale price of goods. It should be noted that goods sold under the Margin Scheme do not qualify for relief from VAT under the Retail Export Scheme. A detailed Information Leaflet entitled Tax Free Purchases for non-EU Tourists is available.

51

Purchases for export

14.3 A VAT-registered trader who supplies goods to the domestic market and also exports goods is entitled to an input credit or deduction for VAT invoiced to him or her on purchases for both domestic and export sales. The credit may be taken against VAT liability on domestic sales. Normally a trader established in the State is not entitled to receive from another VATregistered trader, taxable goods free of VAT on the grounds that the goods are intended for export, but see paragraph 15.3 of Chapter 15 for an exception to this rule. Traders who by virtue of the level of their exports are in a permanent repayment position may arrange with the inspector of taxes to submit monthly returns to facilitate earlier repayment of input VAT.

Records etc. required in connection with exports

14.4 As a general rule, each transaction needs to be supported by the commercial documents ordinarily issued in connection with the purchase/sale of goods (orders, correspondence, copy invoices, dispatch notes, delivery notes, receipts etc.), together with evidence that the goods have left the EU (see paragraph 14.5 below). These records, documents etc. should be held for production to Revenue officers as necessary. They should not accompany a traders VAT3 returns.

Evidence of export of goods

14.5 Evidence that goods have left the EU will normally be as follows in the case of goods exported by the supplier, i.e. where the supplier uses his or her own vehicles to transport goods outside the EU and ownership is transferred to the purchaser there, the third copy of the export declaration form (SAD) certified by Customs will normally suffice; in the case of goods exported by sea by a carrier acting on behalf of a supplier, the supplier should ensure that he or she obtains from the shipping company a copy bill of lading, or certificate of shipment or shipping advice, as appropriate; in the case of goods exported by air by a carrier acting on behalf of a supplier, the supplier should ensure that he or she obtains from the airline concerned a signed copy of the waybill, with flight details added; in the case of goods exported by post the supplier should obtain certificates of posting from the post office of dispatch. If it is a traders practice to use a post book the trader should have it properly stamped by the post office of dispatch. In all cases the full name and full address of the consignee must be clearly shown.

Exports by purchasers
14.6 Goods exported by carriers acting on behalf of purchasers established in Ireland do not qualify for zero- rating. Goods exported outside the EU by or on behalf of the purchaser who is established outside the State qualify for zero-rating. The required evidence in this case is that indicated in the second and third examples in paragraph 14.5 above.

52

Chapter 15 VAT rates

This Chapter outlines the different rates of VAT currently applicable and describes the circumstances under which such rates apply. A detailed listing of the rates applicable to an extensive listing of goods and services is available on the Revenue website at www.revenue.ie.

Goods and services attracting VAT at the standard rate, currently 21%
15.1 All goods and services other than those specified as being exempt or liable at the zero or 13.5% rate (see Appendices A to D and Appendix F in certain circumstances) are liable to VAT at the standard 21% rate. The only exceptions are livestock, greyhounds and the hire of horses which are currently liable at 4.3%. It would not be feasible to compile a definitive list of the coverage of the 21% rate but an indication of its scope is given at Appendix E.

Goods and services attracting VAT at the zero rate

15.2 Goods and services which attract the zero rate of VAT include exports, intra-Community supplies of goods to VAT-registered traders in other EU Member States (see Chapter 11), certain food and drink, oral medicine, certain books and booklets, certain animal feeding stuffs, certain fertilisers, seeds and plants used to produce food, clothing and footwear appropriate to children under 11 years of age and supplies to VAT-registered traders authorised by Revenue under the VAT 13A Scheme - (see paragraph 15.3 below). Full details are contained in Appendix B.

Zero-rating under the VAT 13A Scheme

15.3 This scheme provides that a trader who derives not less than 75% of his annual turnover from supplies of goods out of the State, can apply to have most goods and services supplied to him or her and intra- Community acquisitions and imports made by him or her zero rated. The zero-rating does not apply to the supply or hire of any passenger motor vehicles, the supply of petrol, and the provision of services consisting of the supply of food, drink, accommodation, entertainment or other personal services and other non-deductible purchases. A VAT-registered trader who thinks that he or she might qualify under this scheme should make application to the local inspector of taxes. A VAT Information Leaflet No. 21/01 is available.

Goods and services subject to the 10% rate

15.4 This rate is confined to the goods and services listed in the Third Schedule to the VAT Act, 1972 (as amended) which is reproduced at Appendix C. In practice, this rate no longer applies.

Goods and services attracting VAT at the 13.5% rate

15.5 Goods and services which attract VAT at 13.5% include certain fuels, buildings and building services, newspapers, magazines and periodicals, repair, cleaning and maintenance services generally, holiday accommodation, photographic supplies, restaurants and provision of commercial sporting facilities. Full details are contained in Appendix D.

53

Exemptions
15.6 The goods and services which are exempted from VAT are listed in Appendix A. Exempted goods and services consist principally of financial, medical and educational activities as well as admissions to and promotion of certain live theatrical and musical performances. Exemption from VAT means that the persons engaged in the exempt activity are not liable for VAT on their receipts and are not entitled to a credit or deduction for VAT borne on their purchases. It is emphasised that exempt bodies are not entitled to receive taxable goods or services free of VAT simply because they are exempt from charging VAT on their supplies. The position of a business with both exempt and taxable activities is explained in paragraph 6.10 of Chapter 6.

Difference between exemption and zero-rating

15.7 These terms appear to have the same meaning, but only to the extent that both exempt and zero rated supplies do not attract what is referred to as a positive rate of VAT. They are different however to the extent that a VAT-registered trader making zero rated supplies (for example, a book shop or food store) is entitled to a refund of VAT on the taxable business purchases (for example, shop fittings, wrapping materials, cash registers etc.) while normally a VAT exempt trader is not entitled to any refund of VAT on purchases in respect of the business.

Repayments
15.8 There are special provisions for repayment of VAT to unregistered persons in certain cases, i.e. on farm buildings by unregistered farmers, on certain purchases by foreign traders in the State, on certain supplies to unregistered sea-fishermen, disabled persons, diplomats etc.. A VAT Information Leaflet No. 18/01 is available.

Intra-Community acquisitions and imports

15.9 VAT is chargeable on intra-Community acquisitions of goods, imports of goods and certain services received from abroad, including Fourth Schedule services, at the rates which apply to supplies of similar goods and services within the State. See, however, VAT Information Leaflet No. 17/01, VAT Treatment of Second-Hand Goods The Margin Scheme.

Formal determination of rate

15.10 On the request in writing of a taxable person Revenue may formally determine(i) whether or not any particular activity is an exempted activity; and

(ii) the rate at which VAT is chargeable in relation to the supply of goods of any kind, the supply of goods in any particular circumstances or the supply of services of any kind. The purpose of a determination is to clarify areas of genuine doubt. Revenue may refuse to make a determination in certain circumstances. For example, they will not make one if a previous determination has been published in regard to the matter or if, in their opinion, the matter is sufficiently free from doubt. The determination will be notified to the person who requested it. It may also be published in Iris Oifigiil. The person concerned, or, where the determination is published in Iris Oifigiil,

54

any taxable person who in the course or furtherance of business supplies goods or services of a kind or in the circumstances specified in the determination, may, if aggrieved by the determination, appeal against it by giving notice in writing to the inspector of taxes within twenty-one days. The arrangements for hearing appeals are described in paragraph 15.11 below.

Appeals against formal determinations

15.11 The Appeal Commissioners are the first court of appeal against formal determinations. The Appeal Commissioners are separate from and independent of Revenue. They sit at various centres throughout the country and hear arguments from the appellants and Inspectors of Taxes on the points at issue. An appellant may present his or her case personally or may engage a professional representative such as an accountant, solicitor or barrister. If the appellant is dissatisfied with the Appeal Commissioners ruling, he or she may appeal to the Circuit Court. Both the taxpayer and the inspector of taxes may appeal to the High Court on a point of law and, if necessary in turn to the Supreme Court (see also paragraph 1.18).

Letter of expression of doubt

15.12 VAT law provides that where a person is in doubt about the application of VAT law to a transaction, including the rate of VAT, he or she may lodge a letter of expression of doubt with Revenue. If the expression of doubt is accepted by Revenue as genuine, interest will not apply to any tax payable on the resolution of the matter in doubt. In the event that Revenue refuses to accept that the expression of doubt is genuine, the taxpayer may have such refusal referred to the Appeal Commissioners. A VAT Information Leaflet No. 2/02 is available.

55

Chapter 16 Changes in the rates of VAT

This Chapter explains the procedures to be followed by VAT-registered traders when increases or reductions in VAT rates take place.

Which VAT rate must the trader apply? 16.1 Traders must apply the rate of VAT in force at the time they issue or are obliged to issue an invoice in the case of transactions with other VAT-registered traders. In the case of transactions with persons who are not registered for VAT, traders must apply the rate in force at the time of the supply.

Invoices 16.2 All VAT invoices issued by one VAT-registered trader to another VAT-registered trader on or after the date of a change in VAT rates (upwards or downwards) should show VAT at the new rates. This is so even if the goods or services were supplied before the date of the change. A VAT-registered trader is not required to issue a VAT invoice to an unregistered person. VAT liability in respect of goods or services supplied by a VAT-registered trader to an unregistered person is normally related to the date of supply and not to the date of issue of the invoice, if any. Goods or services which are actually supplied to unregistered persons prior to the date of a change in VAT rates are taxable at the rate in force when they are supplied even though they may be invoiced on or after the date of the change.

Credit notes 16.3 Any credit note relating to a supply of goods or services which contains a VAT adjustment and which is issued to a VAT-registered trader on or after the date of a change, must show VAT at the new rate even if the original invoice showed VAT at the old rate. Any credit note relating to a supply of goods or services which is issued to an unregistered person on or after the date of a change should show or include VAT at the rate in force at the time of the supply.

Payments in advance 16.4 Payments, including deposits, received from VAT-registered traders before the date of a change in respect of goods or services not supplied until on or after that date are, in the case of traders on the invoice basis of accounting, subject to VAT by reference to the rate in force at the time the invoice relating to the payment is issued or ought to have been issued, whichever is the earlier. In the case of traders operating on the moneys received basis, the rate appropriate to the supply is by reference to the rate in force at the time of the advance payment. An advance payment received from an unregistered person is subject to VAT by reference to the rate in force at the time of the advance payment.

56

Contracts existing at time of a change in VAT rates 16.5 Where a contract to supply goods or services is entered into before the date of a change in a VAT rate and the contract is not completed until after that date, the agreed price is subject to an appropriate adjustment on account of the change in the VAT rate, unless there is agreement to the contrary between the contracting parties. If, for example, a builder were to contract in January to build a house for 100,000 and the rate of VAT were to be increased with effect from 1 March, the builder could increase the agreed price to include the extra VAT, in the absence of agreement to the contrary, assuming the house had not been completed or paid for before 1 March. The builder would, of course, be liable for the correct liability arising on the supply. Fixed interval payments becoming due before the date of a change in respect of a period of time spanning that date (for example, advance quarterly rentals on office equipment due and payable, say, one month before the date of a change) may be treated, for the purposes of transition only, as being taxable at the old rates if invoiced before the date of the change. Alternatively, the rental in respect of the periods of rental before and after the date of the change may be separately invoiced. Budget account sales, hire-purchase sales and other credit sales 16.6 These sales are chargeable to VAT as follows at the rate in force at the time of the sale, in the case of sales to unregistered persons, or at the rate in force at the time of issue of the invoice or the time the invoice ought to have been issued, if earlier, in the case of sales to VAT-registered traders. Stock on hands on the date of a change 16.7 Traders who are registered for VAT on the date of a change of VAT rates must account for VAT at the new rates even though they may have been invoiced with VAT at the old rates. Such persons will already have been entitled to a credit for VAT on the purchase of that stock, subject to the usual conditions.

57

Chapter 17 Building and associated services

This Chapter describes how VAT is applied to the various services associated with the building industry.

Building and other contractors

17.1 Building contractors and other contractors operating in the building sector (such as electrical, plumbing, plastering, heating, painting, roofing and flooring contractors) are carrying on taxable activities and they are obliged to register for VAT if their annual turnover exceeds or is likely to exceed 25,500. VAT-registered contractors are liable for VAT at 13.5 % on most activities in the building sector (see paragraph 17.2 below). VAT-registered contractors are entitled, like other taxable persons, to deduct the VAT properly invoiced to them, subject to the normal restrictions (see paragraph 6.7 of Chapter 6), on their VAT 3 returns.

Application of the 13.5% rate

17.2 The 13.5% rate of VAT applies to most activities carried on by contractors operating in the building sector. It normally applies, therefore, to house building and construction work generally; to building renovation and demolition; to building maintenance and repair; to the installation of plumbing, heating and electrical services; and to the supply, installation, maintenance and repair of fixtures. The 13.5% rate applies also to the supply and placing in a fixed position of garden sheds, greenhouses and similar structures, subject to certain conditions. The 13.5 % rate does not apply to the supply only of any building materials other than ready to pour concrete and concrete blocks, nor does it apply to the supply and installation, or installation only, of fittings, as distinct from fixtures. Neither does the 13.5 % rate apply to ready to pour concrete nor to concrete blocks supplied under the Auction Scheme or the Margin Scheme. In both of these circumstances, the rate of VAT applicable is 21 %. For details of the Margin Scheme and Special Auction Scheme see VAT Information Leaflets, VAT Treatment of Second Hand Goods - The Margin Scheme (No. 17/01) and VAT Treatment of Auctioneers and Auction and Agency Sales (No. 5 /98).

Fixtures
17.3 Fixtures are goods which are attached to buildings in such a way that they cannot be removed without substantial damage being caused to the goods themselves or to the buildings to which they are attached. In the case of houses, fixtures could, as a general rule, be said to include the basic structural items normally to be found in a new, unfurnished, standard house. Fixtures do not include, however, curtains, blinds, floor coverings, cookers, hobs, gas and electric fires and the like. It is important to note that, apart from ready to pour concrete and concrete blocks, the supply only of building materials does not qualify for the 13.5% rate of VAT even though the goods may ultimately become fixtures. For example, the supply only of kitchen units to a builder is

58

chargeable at 21 % even though the units, when installed in a building by the builder, may be chargeable at 13.5 % (see paragraph 17.4 below on the two-thirds" rule). The builder is, of course, entitled to full deduction of the tax charged to him on the units, subject to the usual conditions. The installation of or work on fixtures is normally taxable at 13.5 %. For further details on which items are regarded as qualifying for the 13.5% rate on their supply and installation, see VAT Information Leaflet No. 2/99 on Building and Associated Services.

The two-thirds" rule

17.4 The rate of VAT applying to services, including building services, depends on the two-thirds" rule. This provides that a transaction is liable to VAT as a sale of goods at the appropriate rate and not as a service, if the value of the goods used in providing the service, that is their cost excluding VAT to the service contractor, exceeds two-thirds of the total VAT exclusive charge to the customer. The two-thirds" rule does not usually affect building services in which the labour element is substantial. It would be likely to come into operation in the case of a service consisting of the supply and installation of, say, a transformer or a strong room. The possibility of its application should never be overlooked and contractors should consult the local inspector of taxes if there is any doubt about the correct liability to tax. Sub-contractors, in particular, may find that the 21% rate may apply to their portion of a main contract even though the main contract may itself be liable at the 13.5% rate.

Fittings
17.5 As distinct from fixtures, fittings are goods which, though often attached to buildings, can be removed without substantial damage being caused to the goods themselves or to the building to which they are attached. For further details on which items are fittings, and therefore subject to the 21% rate, see VAT Information Leaflet No 2/99. The supply, or supply and installation for a single inclusive charge, of these goods is chargeable to VAT at 21%. In the event that the installation element itself involves the installation of a fixture, as described at paragraph 17.3 above, this may qualify for the 13.5% rate. For example both the supply and the installation of an electric cooker for an inclusive charge are liable at 21%. If, in connection with the installation, it was necessary to re-wire for a power supply point and a separate charge was raised for such work, the 13.5% rate would apply to this charge. It is important for main contractors to understand that, while it may generally be so, charges invoiced by sub-contractors do not necessarily always qualify for the 13.5% rate. In some circumstances where the two-thirds" rule is breached by a subcontractor the 21% rate may apply. While tax invoiced by a sub-contractor at 21% is deductible by the main contractor, the latter, in turn, must regard such invoiced amounts as being in respect of goods in considering whether he has breached the two-thirds" rule in respect of the overall supply (see paragraph 17.4 above).

59

Stage Payments
17.6 VAT is payable by a contractor operating on the cash basis of accounting by reference to the taxable period in which a payment for the job is received. This is also the case for contractors operating on the invoice basis, where they supply building services to persons not registered for VAT. VAT is payable by contractors operating on the invoice basis, where they supply building services to VAT-registered persons, by reference to the taxable period in which the invoice issues or ought to issue. A VAT invoice must be issued within the specified time limit to a VAT-registered customer (see Chapter 9) . A VAT invoice is not required to be issued to an unregistered customer but it may be if it suits the contractors business convenience.

Do-it-yourself (D.I.Y.)
17.7 Building materials, with the exception of ready to pour concrete and concrete blocks to which the 13.5% rate applies, are liable at 21%. There is no provision for the repayment to private individuals who do their own building work, of any of the VAT incurred.

Property transactions
17.8 VAT on dealings in land and buildings (property) is the subject of a separate guide and leaflets which may be obtained from the local Tax Office. As a general rule property does not attract a liability to VAT unless all the following conditions are satisfied (a) the property must have been developed in whole or in part after 31 October, 1972, (b) the vendor must have a taxable interest in the property, (c) the vendor must have disposed of a taxable interest in the property, (d) the disposal must have been made in the course or furtherance of business, and (e) the circumstances must have been such that the person disposing of the interest was entitled to a tax credit for any tax suffered in relation to the development or the acquisition of his or her interest. With effect from the 25th March, 2002 a disposal of a leasehold interest in a property only constitutes a supply of goods where the consideration is at least equal to the economic value of this leasehold interest. Where the consideration on disposal is less than the economic value this disposal is deemed to be an exempt letting of property. In these circumstances the person making the disposal is not entitled to deductibility on the acquisition or development of the property. Accordingly, any deductibility previously claimed will be recovered. A trader supplying a taxable interest in property other than a freehold interest to a lessee, who is entitled to take a full deduction in respect of VAT charged on the supply may be in a position to avail of the Section 4A relief. Under this relief, the lessee will be obliged to account for VAT by reverse charge for the VAT due on his or her VAT return but may also take a simultaneous input credit for the VAT in the same VAT return. Both the lessor and the lessee must agree to the application of this relief and have the prior approval of the lessors local inspector of taxes.

60

Property transactions, including the valuation of interests, together with assignments and surrenders of leases are dealt with in the guide entitled VAT and Property Transactions which should always be consulted. In addition, a publication entitled VAT on Property Information Leaflet No. 3 in relation to claims for repayment of VAT on post-letting expenses for periods prior to 27 March 1998 arising out of the Supreme Court Judgement in the case of Erin Executor and Trustee Company Limited is available.

61

Chapter 18 Financial Services

This Chapter gives a broad outline of the VAT issues applicable to financial services in general.

What are financial services?

18.1 There is no definition in Irish VAT law of the term financial services but it may be taken to cover the activities of the banking, investment and insurance sectors. Within these broad headings there is a wide and complex range of financial products. A more detailed description of the VAT treatment of the various activities within the sector is given in the guide entitled VAT and Financial Services, a copy of which may be obtained from the local Tax Office, or from www.revenue.ie. This Chapter therefore deals only with the broad issues which are applicable to financial services.

Law
18.2 Most, but not all, financial services are exempt from VAT. The legal bases for exemption of financial services are paragraphs (i) and (ix)(d) of the First Schedule to the Value-Added Tax Act, 1972, which are reproduced at Appendix A. Examples of services which are exempt from VAT are banking transactions such as borrowing, lending, management of customer accounts; credit card transactions; dealings in stocks, shares and financial securities; management of special investment funds and agency services relating to these activities. Insurance and reinsurance transactions and certain insurance related services are also exempt from VAT per paragraph (xi) of the First Schedule. Services which are liable to VAT include financial and investment advice, equipment leasing, safe keeping services and debt collection.

Exempt supplies of services

18.3 Exempt services are not liable to VAT. As a corollary to this, however, the suppliers of such services (in the present context, financial institutions such as banks and insurance companies etc.) are not entitled to recover VAT incurred on goods and services purchased by them in connection with the provision of those services. Where however, exempt financial services are supplied or deemed to be supplied to customers established outside the EU, input VAT is recoverable to the extent that it relates to those specific services. These services are referred to as qualifying activities in the VAT Act, 1972 (as amended) (see paragraph 18.6 below) It should be noted that the place of supply of exempt financial services, supplied for nonbusiness purposes by a person established in the State, to a customer whose usual place of residence is outside the E.U., for use and enjoyment here, is the State, e.g. a non-EU tourist availing of bureau de change facilities here. Input VAT is not recoverable in respect of such services.

62

Taxable supplies of services

18.4 Financial institutions supplying taxable services are entitled to recover VAT incurred on their purchases of goods and services to the extent that it relates to their taxable activities.

Supplies of both exempt and taxable services

18.5 Where institutions supply both exempt and taxable services, input VAT will arise on purchases of goods and services attributed to both exempt and taxable supplies. There is no difficulty in determining VAT recoverability where purchases are attributable solely either to exempt or taxable supplies, in that no credit is allowable in respect of the former whereas full credit is allowable in respect of the latter. Input VAT may be attributable both to exempt and taxable sides of the business. Goods or services which are not attributable either to taxable outputs or to exempt outputs (referred to as dual-use inputs) must be apportioned by a method which correctly reflects the use to which the inputs are put and also reflects the range of the taxable persons activities (see the Guide to the Apportionment of Input Tax)

Place of supply
18.6 Financial services come within the provisions of the Fourth Schedule to the VAT Act and as such, when received for business purposes, are deemed to be supplied where the services are received (see paragraphs 4.8 and 4.9 of Chapter 4). In the case of financial services received in the State for business purposes, VAT if chargeable, must be accounted for by the recipient of the service in the State. Where financial services are supplied by a person in the State to business persons outside the State, or to private persons outside the EU, the place of supply is normally outside the scope of Irish VAT. However, where such services are supplied by a person established in the State to private persons from outside the EU and the services are for use and enjoyment in the State the place of supply is the State. Supplies of exempt financial services to customers located outside the EU, business or private, are qualifying activities and thereby qualify for input credit (apart, that is, from exempt financial services supplied to non-business persons from outside the E.U. for use and enjoyment in the State). Financial institutions which import taxable financial or other Fourth Schedule services from suppliers outside the State are liable for VAT on such imported services. VAT Information Leaflet No. 9/01 outlines the treatment of Fourth Schedule services.

Insurance and insurance related services

18.7 The provision of insurance services is an exempted activity. Exemption also applies to related services performed by insurance brokers and insurance agents (see paragraph (xi) of Appendix A). The term related services performed by insurance brokers and insurance agents denotes active participation by an agent or broker in the process of arranging or settling the contract of insurance and where claims handling and claims settlement services are concerned the requirement is that the service provider must operate under binding delegated authority.

63

Group registration
18.8 VAT law provides that where two or more persons established in the State are closely bound by financial, economic and organisational links, they may, in certain circumstances, subject to the satisfaction of Revenue, be treated as a single taxable person for VAT purposes (see paragraph 2.13 of Chapter 2). This group registration arrangement is particularly relevant in the case of financial service companies, and conditions relating to group treatment are dealt with in the Guide to Financial Services.

64

Chapter 19 Main VAT Changes

This Chapter outlines the main VAT changes since the introduction of the tax in 1972, and details separately the changes in the VAT rates and the VAT registration thresholds. VAT was introduced with effect from 1 November, 1972. The rates at the time of introduction were zero, 5.26, 16.37 and 30.26%. A special rate of 11.11% applied to dances. A 1% flat-rate addition to purchases from unregistered farmers was part of the system. The limits for registration were 1,800 (2,285.53) 6,000 (7,618.43) and 12,000 (15,236.86) a year according to the type of business. There have been several changes in the rates of VAT and the VAT registration limits since the introduction of the tax and these are set down in the tables below. At the time of this publication (January 2003) there were four general rates of VAT in operation (zero, 10%, 13.5% and 21%). A rate of 4.3% applied to live cattle, sheep, goats, pigs, deer, horses and greyhounds. The main changes in the incidence of the tax since November 1972 are as follows:On 3 September, 1973 most food and oral medicines were added to the list of zero rated goods. The positive rates of VAT were increased to 6.75, 19.5 and 36.75%. On 1 March, 1975 the 1% flat-rate addition for purchases from unregistered farmers was suspended insofar as purchases of live cattle were concerned. On 1 July, 1975 certain clothing, footwear, clothing material and fuel were zero rated. On 1 March, 1976 the 6.75 and 19.5% rates were increased to 10 and 20% respectively. The coverage of the 36.75% rate was modified, a new rate of 35% being introduced on passenger motor vehicles and another new rate of 40% on radios, TV sets, record players and records. The special rate for dances was abolished and these became liable at the same rate as other entertainment services were then. The flat-rate addition, for purchases from unregistered farmers, was discontinued. On 1 July, 1978 the rate of VAT on certain candles was reduced to the zero rate. On 1 March, 1979 the rates of 35 and 40% were repealed and the goods formally chargeable at those rates were transferred to the other rates. In the case of motor cars, TV sets and gramophone records new excise duties were introduced to compensate for the reduction in VAT. Radios became taxable at 20%. The 1% flat-rate addition for purchases from unregistered farmers was restored. The general limits for registration were increased to 3,000 (3,809.21) 9,000 (11,427.64) and 18,000 (22,855.29) a year. On 1 May, 1980 the 20% rate was increased to 25%. On 1 September, 1981 the 10% rate was increased to 15%. The flat-rate addition for purchases from unregistered farmers was increased from 1% to 1.5%. The rate on agricultural contracting services was reduced to an effective 3%. On 20 November, 1981 the general limits for registration were increased to 15,000 (19,046.07) a year for traders supplying services and to 30,000 (38,092.14) a year for other traders.

65

On 1 May, 1982 the 15% and 25% rates were increased to 18% and 30% respectively. The rate of tax on joinery, furniture, furnishings, floor coverings, bed clothing, coffins and certain other goods was reduced to 18%. The tax on books was removed altogether. The 1.5% flat rate addition for purchases from unregistered farmers was increased to 1.8%. On 1 September, 1982 VAT was applied to imports at the point of importation. Barristers, solicitors, accountants, actuaries, racehorse trainers and persons supplying rent and debt collection services became liable for tax for the first time. Penalties were increased. On 1 March, 1983 the 18% and 30% rates were increased to 23% and 35% respectively. The rate on building and associated services was increased from 3% to 5%. The 1.8% flat rate addition for purchases from unregistered farmers was increased to 2.3%. The increase did not apply to hotel accommodation and certain tourist services after 1 May, 1983. On 1 April, 1983 a system of VAT-free importation of materials and components was introduced for manufacturers who export at least 75% of their manufactured produce. On 1 May, 1983 VAT at the rate of 5% was imposed on zero rated fuel, excluding electricity. On 1 July, 1983 the rate of VAT on repair and maintenance services to mechanically propelled road vehicles and agricultural machinery was reduced to 5%. The 2.3% flat rate addition on purchases from unregistered farmers was reduced to 2%. The general limits for registration were reduced to 12,000 (15,236.86) a year for traders supplying services and 25,000 (31,743.45) for others. Additional penalties for non-compliance were introduced. On 1 September, 1983 liquidators and receivers became accountable for VAT on certain taxable goods disposed of by them. On 1 March, 1984 retail export schemes were introduced. The rate of VAT on theatres and circuses and ready-mixed concrete was reduced to 5%. On 1 May, 1984 clothing for persons of 11 years of age or over became liable to VAT at 8%. Materials for the manufacture of all clothing also became liable at 8%. On 1 March, 1985 a fundamental re-structuring of the rate system took place as a result of which three general rates of VAT came into operation (zero, 10 and 23%). This re-structuring included the introduction of VAT at the rate of 10% on footwear for persons of 11 years of age or over and the exemption of theatres and circuses. The 2% addition for purchases from unregistered farmers was increased to 2.2%. On 1 March, 1986 the 23% rate was increased to 25%. The 2.2% addition on purchases from unregistered farmers was increased to 2.4%. On 1 July, 1986 the rate of VAT on services such as meals and catering, cinema and certain other entertainment services, most repair and maintenance services, laundry and cleaning services was reduced from 25% to 10%. The VAT rate on hot take-aways was increased from zero% to 10% while the rate on cooked potato chips was reduced from 25% to 10%. On 1 May, 1987 the flat-rate addition for purchases from unregistered farmers was reduced from 2.4% to 1.7%. On 1 July, 1987 the rate of VAT on driving instruction, photographic services, tour guide services, waste disposal and admissions to specific exhibitions, was reduced from 25% to 10%.

66

On 1 March, 1988 the flat-rate addition for purchases from unregistered farmers was reduced from 1.7% to 1.4%. Electricity became liable to VAT at 5%. On 1 March, 1989 the flat-rate addition for purchases from unregistered farmers was increased from 1.4% to 2%. On 24 May, 1989 the general limits for registration were increased to 15,000 (19,046.07) a year for traders supplying services and 32,000 (40, 631.62) for others. On 1 July, 1989 the rate of VAT on certain works of art and antiques was reduced from 25% to 10%. The management of certain collective investment undertakings was exempted. On 1 November, 1989 corrective spectacles and contact lenses became liable at 10%. On 1 March, 1990 the 25% rate was reduced to 23%. Electricity became liable at 10%. The flatrate addition for purchases from unregistered farmers was increased from 2% to 2.3%. On 30 May, 1990 services supplied by certain cultural bodies and non-profit making groups were exempted. Exemption on some driving lessons was restricted to heavy goods vehicles training. On 1 July, 1990 the rate on certain current affairs magazines was reduced to 10%. On 1 January, 1991 telecommunication services became liable at 10%. The supply and hire of horses and the supply of greyhounds became liable at 2.3%. On 1 March, 1991 the 23% rate was reduced to 21%. The 10% rate was increased to 12.5%. However, buildings, building work, concrete products, newspapers, hotel lettings and short-term hire of boats, caravans and tour guide services remained at 10%. On 29 May, 1991 contract cleaning services were reduced from 21% to 12. 5%. On 1 June, 1991 the rate of VAT on the services of jockeys was reduced to 12.5%. On 1 January, 1992 vets became liable to VAT on their services at the rate of 12.5%. All holiday accommodation became liable at 10%. On 1 March, 1992 the 12.5% rate was increased to 16%. However, fuel, electricity, catering services, admissions to cinemas, shows and some exhibitions, waste disposal, agricultural and vets services remained at 12.5%. The flat-rate addition for purchases from unregistered farmers was increased from 2.3% to 2.7%. On 28 May, 1992 licensees became liable for VAT on admission charges to dances held on their premises. On 1 July, 1992 the rate of VAT on frozen desserts, uncooked confectionery and savoury snack products was increased from zero% to 21%. The provision of commercially run sporting facilities became taxable at 12.5%. Farm relief services became liable at 12.5%. On 1 November, 1992 the rate of VAT on certain bottled waters, fruit juices and sports drinks was increased from zero% to 21%. On 1 January, 1993 the introduction of the Single Market changed the VAT treatment of goods moving between Member States of the European Union. Goods arriving from other Member States are not treated as imports and therefore are not liable to VAT at point of importation, but are accounted for on VAT returns. Intra-Community goods transport services became taxable at a

67

positive rate. Registration thresholds were abolished for persons supplying goods or services within the State if they had no establishment here. The threshold was also abolished for persons in receipt of Fourth Schedule services from abroad. Persons supplying services became subject to the 90% rule in opting for the cash receipts basis of accounting. On 1 March, 1993 the 10% rate was increased to 12.5% and the 16% rate was reduced to 12.5%. However, the rate on auto L.P.G., telecommunications, adult clothing and footwear, contact lenses and spectacles, farm management, farm accountancy and services relating to sales of agricultural property was increased from 16% to 21%. The rate on cakes and non-chocolate biscuits was reduced from 21% to 12.5%. The flat-rate addition for purchases from unregistered farmers was reduced from 2.7% to 2.5%. The rate of VAT on livestock, horses and greyhounds was reduced from 2.7 to 2.5%. On 1 July, 1994 the general limits for registration were increased to 20,000 (25,394.76) a year for traders supplying services and 40,000 (50,789.52) for traders supplying goods. The annual turnover for operating the cash receipts basis of accounting was increased to 250,000 (317,434.52). On 1 September, 1994 loss adjusters services became liable to VAT at the 21% rate. On 2 June, 1995 interest charges on hire-purchase or credit-sale transactions became exempt from VAT. On 1 July, 1995 the law was amended to provide for the implementation of the Margin Scheme and Auction Scheme for second-hand goods and a special scheme for second-hand motor vehicles. Changes also applied to the VAT treatment of works of art, collectors items and antiques set out in a new Eighth Schedule to the VAT Act. On 1 January, 1996 certain non-member golf turnover, such as income from green fees of member-owned clubs and local authority golf courses, became liable to VAT at the rate of 12.5%. The VAT treatment of contract work also changed. On 1 March, 1996 the flat-rate addition for purchases from unregistered farmers was increased from 2.5% to 2.8%. On 1 March, 1997 The flat-rate addition for purchases from unregistered farmers was increased from 2.8% to 3.3%. On 1 July, 1997 changes were made in relation to the place of supply of telecommunication services received from abroad. On 17 July, 1997 the annual turnover threshold for operating the cash basis of accounting was increased to 500,000. (634,869.04). On 1 September, 1997 a person whose retail sales of horticultural produce exceeded 40,000 (G50,789.52) per annum was obliged to register and account for VAT. The rate of VAT on horticultural products was reduced from 21% to 12.5%. On 1 March, 1998 the flat-rate addition for purchases from unregistered farmers was increased from 3.3% to 3.6%. On 27 March, 1998 the time limit within which a claim for a refund of VAT may be made was reduced from 10 years to 6 years, as also was the time limit within which estimates or assessments of VAT other than in cases of fraud or negligence could be raised.

68

On 1 May, 1998 the rate of VAT on periodicals and certain printed matter was reduced from 21% to 12.5%. On 1 July, 1998 farmers selling livestock semen were obliged to register for VAT where sales exceeded 40,000 (50,789.52) per annum. The rate on insemination services and sales of livestock semen was reduced to 12.5%. On 1 January, 1999 businesses were given the option of conducting their Revenue affairs in either Irish pounds or euro . On 1 March, 1999 the flat-rate addition for purchases from unregistered farmers was increased from 3.6% to 4.0%. On 25 March, 1999 the requirement to register for farmers selling livestock semen was restricted to those farmers selling bovine semen. On 1 July, 1999 duty-free sales to travellers on intra-Community journeys were abolished. The zero rate was applied to goods exported by or on behalf of purchasers established outside the State. On 1 January, 2000 a Special Scheme for investment gold was introduced. On 1 March, 2000 the flat-rate addition for purchases from unregistered farmers was increased from 4% to 4.2%. On 23 March, 2000 the apportionment rules were revised and the unjust enrichment provisions extended. Revised rules governing the cancellation of registration in respect of the letting of holiday homes were introduced. On 1 January, 2001 the flat-rate addition for purchases from unregistered farmers increased from 4.2% to 4.3%. The standard rate was reduced from 21% to 20%. . On 21 March, 2001 the transfer of business rules were amended. On 30 March, 2001 subject to certain conditions, changes relating to electronic invoicing etc. were introduced. On 1 May, 2001 the supply, hiring etc. of equipment incorporated or used in certain sea going vessels was zero rated. On 1 September, 2001 toll charges (road/bridge tolls), formerly exempt, became taxable at 20%. Supply of research services by universities became taxable at 20%. On 1 January, 2002 the right of Member States to oblige non-established traders to appoint fiscal representatives was removed On 1 March, 2002 the standard rate of 20% was increased to 21%. On 25 March, 2002 revised accounting arrangements were introduced in respect of cultural, artistic, entertainment and similar services provided by persons not established in the State. The acceptance off course by bookmakers of tote bets became exempt from VAT. The concept of Economic Value in relation to the disposal of an interest in property was introduced. On 1 September, 2002 interest became chargeable at a daily rate of 0.0322%.

69

On 1 January, 2003 the reduced rate of 12.5% was increased to 13.5%.

70

Table of Rates
Date General Rates (per cent) Farmers flat-rate addition and livestock rate (per cent) 1 1 suspended in relation to live cattle discontinued 1 1 1.5 1.8 2.3 2.3 2 2 2.2 2.4 1.7 1.4 2 2.3 2.3 2.7 2.5 2.8 3.3 3.6 4.0 4.2 4.3 4.3 4.3

1 November 1972 3 September 1973 1 March 1975 1 March 1976 1 March 1979 1 May 1980 1 September 1981 1 May 1982 1 March 1983 1 May 1983 1 July 1983 1 May 1984 1 March 1985 1 March 1986 1 May 1987 1 March 1988 1 March 1989 1 March 1990 1 March 1991 1 March 1992 1 March 1993 1 March 1996 1 March 1997 1 March 1998 1 March 1999 1 March 2000 1 January 2001 1 March 2002 1 January 2003

zero, 5.25, 16.37, 30.26 zero, 6.75, 19.5, 36.75 zero, 6.75, 19.5, 36.75 zero, 10, 20, 35, 40 zero, 10, 20 zero, 10, 25 zero, 15, 25 zero, 18, 30 zero, 23, 35 zero, 5, 18, 23, 35 zero, 5, 18, 23, 35 zero, 5, 8, 18, 23, 35 zero, 10, 23 zero, 10, 25 zero, 10, 25 zero, 10, 25, (electricity 5) zero, 10, 25, (electricity 5) zero, 10, 23 zero, 10, 12.5, 21 zero, 10, 12.5, 16, 21 zero, 10, 12.5, 21 zero, 10, 12.5, 21 zero, 10, 12.5, 21 zero, 10, 12.5, 21 zero, 10, 12.5, 21 zero, 10, 12.5, 21 zero, 10, 12.5, 20 zero, 10, 12.5, 21 zero, 10, 13.5, 21

71

Table of registration thresholds for suppliers established in the State

Thresholds Services Date Goods

1 November 1972 1 November 1979 20 November 1981 1 July 1983 24 May 1989 1 July 1994 1 January 2002

*1,800 *3,000 15,000 12,000 15,000 20,000

2,285.53 3,809.21 19,046.07 15,232.86 19.046.07 25,394.76 25,500

*6,000 *9,000 30,000 25,000 32,000 40,000

7,618.43 11,427.64 38,092.14 31,743.52 40,631.62 50,789.52 51,000

*12,000 *18,000

15,236.86 22,855.29

*Equivalent to six consecutive two-monthly taxable periods. Note: See also Chapter 2 for the complete details of current registration thresholds.

72

Appendix A Exempted Activities

An extensive list of over 2,500 VAT ratings is available on the Revenue website at www.revenue.ie (i) Financial services consisting of(a) the issue, transfer or receipt of, or any dealing in, stocks, shares, debentures and other securities, other than documents establishing title to goods, (b) the arranging for, or the underwriting of, an issue specified in subparagraph (a), (c) the operation of any current, deposit or savings account and the negotiation of, or any dealings in, payments, transfers, debts, cheques and other negotiable instruments excluding debt collection and factoring, (d) the issue, transfer or receipt of, or any dealing in, currency, bank notes and metal coins, in use as legal tender in any country, excluding such bank notes and coins when supplied as investment goods or as collectors pieces, (e) the granting and the negotiation of credit and the management of credit by the person granting it, (f) the granting of, or any dealing in, credit guarantees or any other security for money and the management of credit guarantees by the person who granted the credit,

(g) the management of an undertaking which is (I) (Ia) (II) a collective investment undertaking as defined in section 172A of the Taxes Consolidation Act, 1997 (as amended by section 59 of the Finance Act, 2000), or a special investment scheme within the meaning of section 737 of the Taxes Consolidation Act, 1997, or administered by the holder of an authorisation granted pursuant to the European Communities (Life Assurance) Regulations, 1984 (S.I. No. 57 of 1984), or by a person who is deemed, pursuant to Article 6 of those regulations, to be such a holder, the criteria in relation to which are the criteria specified in relation to an arrangement administered by the holder of a licence under the Insurance Act, 1936, in section 9 (2) of the Unit Trusts Act, 1990, or a unit trust scheme established solely for the purpose of superannuation fund schemes or charities, or determined by the Minister for Finance to be a collective investment undertaking to which the provisions of this subparagraph apply;

(III) (IV)

(h) services supplied to a person under arrangements which provide for the reimbursement of the person in respect of the supply by him of goods or services in accordance with a credit card, charge card or similar card scheme; (ii) childrens or young peoples education, school or university education, and vocational training or retraining (including the supply of goods and services incidental thereto), other than supply of research services, provided by educational establishments recognised by the State, and education, training or retraining of a similar kind, excluding instruction in the driving of mechanically propelled road vehicles other than vehicles designed or constructed for the conveyance of goods with a capacity of 1.5 tonnes or more, provided by other persons;

This exemption includes teaching or training in computer skills, arts and crafts, ballet, cooking, drama, dressmaking, elocution, languages, modelling, music, driving of commercial vehicles, hairdressing, management techniques and selling. The exemption does not include teaching, training or coaching in golf, tennis, judo etc., consultancy type services or personal development courses.

73

(iii) professional services of a medical nature, other than services specified in paragraph (iiib), but excluding such services supplied in the course of carrying on a business which consists in whole or in part of selling goods; (iiia) supply by dental technicians of services of a dental nature and of dentures or other dental prostheses; (iiib) professional services of a dental or optical nature; (iv) letting of immovable goods (which does not include the service of allowing a person use a toll road or a toll bridge) with the exception of(a) letting of machinery or business installations when let separately from any other immovable goods of which such machinery or installations form part; (b) letting of the kind to which paragraph (ii) of APPENDIX C or paragraph (xiii) of APPENDIX D refers; (bi) provision of facilities of the kind to which paragraph (viia) of APPENDIX D refers; (c) provision of parking accommodation for vehicles by the operators of car parks; and (d) hire of safes; (v) hospital and medical care or treatment provided by a hospital, nursing home, clinic or similar establishment; (vi) services for the protection or care of children and young persons, and the provision of goods closely related thereto, provided otherwise than for profit and the supply of services for the protection or care of children and young persons, and the provision of goods closely related thereto, provided by persons whose activities may be regulated by regulations made under Part VII of the Child Care Act, 1991; (vii) supply of goods and services closely related to welfare and social security by non-profit making organisations; (viii) promotion of and admissions to live theatrical or musical performances, including circuses, but not including(a) dances, or (b) performances in conjunction with which facilities are available for the consumption of food or drink during all or part of the performance by persons attending the performance;

Broadly speaking dances, cabaret type entertainment, film shows etc. are taxable. Plays, concerts, opera, ballet, circuses etc. are not.
(viiia) supply of cultural services and of goods closely linked thereto by any cultural body, whether established by or under statute or otherwise, which is recognised as such a body by the Revenue Commissioners for the purposes of this paragraph, not being services to which paragraph (viii) relates;

74

(ix) agency services in regard to (a) the arrangement of passenger transport or accommodation for persons, and (b) ... (c) ... (d) services specified in paragraph (i), excluding the services of loss adjusters and excluding management and safekeeping services in regard to the services specified in paragraph (i) (a), not being services specified in subparagraph (g) of paragraph (i);

(x) (xi) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents and, for the purposes of this paragraph, related services includes the collection of insurance premiums, the sale of insurance, and claims handling and claims settlement services where the supplier of the insurance services delegates the authority to an agent and is bound by the decision of that agent in relation to that claim; (xia) public postal services (including the supply of goods and services incidental thereto) supplied by An Post including postmasters, or by persons licensed in accordance with section 73 or subsection (1) of section 111 of the Postal and Telecommunications Services Act, 1983; (xii) ....... (xiii) the national broadcasting and television services, excluding advertising; (xiv) transport of passengers and their accompanying baggage; (xv) the acceptance of bets subject to the duty of excise imposed by section 24 of the Finance Act, 1926, of bets of the kind referred to in section 89 of the Finance Act, 1994, and of bets of the kind referred to in section 75 of the Finance Act, 1996, where the event which is the subject of the bet is either a horse race or a greyhound race and the bet is entered into during the meeting at which such race takes place and at the place at which such meeting is held; (xva) the acceptance of totalisator bets (a) by a person or a body of persons operating under a licence granted under the Totalisator Act, 1929, or (b) by a licensed bookmaker acting in accordance with the provisions of section 19A (a) of the Betting Act, 1931 (inserted by the Horse and Greyhound Racing Act, 2001); (xvi) (xvii) (xviii) issue of tickets or coupons for the purpose of a lottery; promotion of (other than in the course of the provision of facilities of the kind specified in paragraph (viia) of APPENDIX D), or the admission of spectators to, sporting events; collection, storage, supply, intra-Community acquisition or importation of human organs, human blood and human milk;

(xviiia) supply, intra-Community acquisition and importation of investment gold (within the meaning of Section 6A) other than supplies of investment gold to the Central Bank of Ireland; (xviiib) supply of services of an intermediary (as defined in section 6A) acting in that capacity. (xix) funeral undertaking;

(xx) ....... (xxi) .......

75

(xxii)

supply of services and of goods closely related thereto for the benefit of their members by non-profit making organisations whose aims are primarily of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature where such supply is made without payment other than the payment of any membership subscription;

(xxiia) supply of services by an independent group of persons (being a group which is an independent entity established for the purpose of administrative convenience by persons whose activities are exempt from or are not subject to tax) for the purpose of rendering its members the services directly necessary for the exercise of their activities and where the group only recovers from its members the exact reimbursement of each members share of the joint expenses; (xxiii) provision of facilities for taking part in sporting and physical education activities, and services closely related thereto, provided by non-profit making organisations (with the exception of facilities to which paragraph (viib) or (viic) of APPENDIX D refers);

(xxiv) supply of goods, other than a supply of goods of a kind specified in section 3 (1)(g) [of the VAT Act], by a person being goods (a) (b) (c) (xxv) which were used by him for the purposes of a business carried on by him, in relation to the acquisition or application of which he had borne tax, and which are of such a kind or were used in such circumstances that no part of the said tax was deductible under section 12 [of the VAT Act]; catering services supplied

(a) to patients of a hospital or nursing home in the hospital or nursing home, and (b) to students of a school in the school.

76

Appendix B Goods and Services Chargeable at the Zero Rate

An extensive list of over 2,500 VAT ratings is available on the Revenue website at www.revenue.ie (i) The supply of goods (a) subject to a condition that they are to be transported directly by or on behalf of the person making the supply (I) outside the Community: Provided that this subparagraph shall not apply to a supply of goods to a traveller (within the meaning assigned by section 13 (3B)) [of the VAT Act] which such traveller exports on behalf of the supplier and such supply shall be deemed to be a supply of the type referred to in subparagraph (f), or

(II) to a registered person within the customs-free airport, (aa) subject to a condition that they are to be dispatched or transported directly outside the Community by or on behalf of the purchaser of the goods where that purchaser is established outside the State, (b) dispatched or transported from the State to a person registered for value-added tax in another Member State, (c) being new means of transport dispatched or transported directly by or on behalf of the supplier to a person in the territory of another Member State, (cc) being excisable products dispatched or transported from the State to a person in another Member State when the movement of the goods is subject to the provisions of Chapter II of Part II of the Finance Act, 1992, and any other enactment which is to be construed together with that Chapter, which implement the arrangements specified in paragraph 4 and 5 of Article 7, or Article 16, of Council Directive No. 92/12/EEC of 25 February, 1992
(a)

(d) by a registered person within a free port to another registered person within a free port, (e) by a registered person within the customs-free airport to another registered person within the customs-free airport or a free port;

The term free port means the land declared to be a free port for the purposes of the Free Ports Act, 1986, by order made under section 2 of that Act. At the time of this publication the only order made is that relating to Ringaskiddy free port.
(f) which are a travellers qualifying goods (within the meaning assigned by subsection (3B) of section 13) [of the VAT Act], provided that the provisions of subsection (1A) of that section and regulations (if any) made thereunder are complied with; O.J. No. L76, 23 March, 1992, p.l.

(a)

77

(ia) subject to such conditions and in such amounts as may be specified in regulations (a) the supply of goods, in a tax-free shop approved by the Revenue Commissioners, to travellers departing the State for a place outside the Community, or (b) the supply, other than by means of a vending machine, of food, drink and tobacco products on board a vessel or aircraft to passengers departing the State for another Member State, for consumption on board that vessel or aircraft;(a) (ii) ...... (iii) the carriage of goods in the State by or on behalf of a person in execution of a contract to transfer the goods to a place outside the Community; (iiia) intra-Community transport services involving the carriage of goods to and from the Azores or Madeira; (iiib) subject to and in accordance with regulations, the importation of goods which, at the time of the said importation, are consigned to another Member State; (iv) the provision of docking, landing, loading or unloading facilities, including customs clearance, directly in connection with the disembarkation or embarkation of passengers or the importation or exportation of goods; (v) the supply, modification, repair, maintenance and hiring of(a) sea-going vessels of a gross tonnage of more than 15 tons being vessels used or to be used (I) for the carriage of passengers for reward,

(II) for the purposes of a sea fishing business, (III) for other commercial or industrial purposes, or (IV) for rescue or assistance at sea, or (b) aircraft used or to be used by a transport undertaking operating for reward chiefly on international routes; (va) the supply, repair, maintenance and hiring of equipment incorporated or used in aircraft to which subparagraph (b) of paragraph (v) relates; (vaa) subject to and in accordance with regulations, if any, the supply, hiring, repair and maintenance of equipment incorporated or for use in sea-going vessels to which subparagraph (a) of paragraph (v) relates;
(a)

inserted by the European Communities (Value-Added Tax) Regulations, 1999.

78

(vb) the supply of goods for the fuelling and provisioning of sea-going vessels and aircraft of the kind specified in paragraph (v) but not including goods for supply on board such vessels or aircraft to passengers for the purpose of those goods being carried off such vessels or aircrafts;(a) (vc) the supply of navigation services by the Irish Aviation Authority to meet the needs of aircraft used by a transport undertaking operating for reward chiefly on international routes; (vi) services, supplied by an agent acting in the name and on behalf of another person, in procuring (a) the export of goods, (b) services specified in paragraphs (iii), (iiia), (iv), (v) or (x), or (c) the supply of goods or services outside the Community; (via) subject to and in accordance with section 13A [of the VAT Act], the supply of qualifying goods and qualifying services to, or the intra-Community acquisition or importation of qualifying goods by, an authorised person in accordance with that section, excluding supplies of goods within the meaning of paragraph (e) or (f) of subsection (1) of section 3 [of the VAT Act];

This applies the zero rate to supplies of goods and services to authorised persons (see paragraph 15.3 of Chapter 15).
(vib) the supply of services in procuring a repayment of tax due on the supply of a travellers qualifying goods (within the meaning assigned by subsection (3B) of section 13) [of the VAT Act] or the application of the provisions of subparagraph (i)(f) of this Schedule to that supply of goods, provided that the provisions of subsection (1A) of that section and regulations (if any) made thereunder are complied with; (vii) animal feeding stuff, excluding feeding stuff which is packaged, sold or otherwise designated for the use of dogs, cats, cage birds or domestic pets; (viii) fertiliser (within the meaning of the Fertilisers, Feeding Stuffs and Mineral Mixtures Act, 1955) which is supplied in units of not less than 10 kilograms and the sale or manufacture for sale of which is not prohibited under section 4 or 6 of the said Act; (ix) services provided by the Commissioners of Irish Lights in connection with the operation of lightships, lighthouses or other navigational aids; (x) gold supplied to the Central Bank of Ireland; (xi) life saving services provided by the Royal National Lifeboat Institution including the organisation and maintenance of the lifeboat service;

(a)

inserted by the European Communities (Value-Added Tax) Regulations, 1999

79

(xii) food and drink of a kind used for human consumption, other than the supply thereof specified in paragraph (iv) of APPENDIX D, excluding (a) beverages chargeable with any duty of excise specifically charged on spirits, beer, wine, cider, perry or Irish wine, and preparations thereof, (b) other beverages, including water and syrups, concentrates, essences, powders, crystals or other products for the preparation of beverages, but not including (I) tea and preparations thereof,

(II) cocoa, coffee and chicory and other roasted coffee substitutes, and preparations and extracts thereof, (III) milk and preparations and extracts thereof, or (IV) preparations and extracts of meat, yeast, or egg; (c) ice cream, ice lollipops, water ices, frozen desserts, frozen yoghurts and similar frozen products, and prepared mixes and powders for making any such product or such similar product; (d) (I) chocolates, sweets and similar confectionery (including glac or crystallised fruits), biscuits, crackers and wafers of all kinds, and all other confectionery and bakery products, whether cooked or uncooked, excluding bread,

(II) in this subparagraph bread means food for human consumption manufactured by baking dough composed exclusively of a mixture of cereal flour and any one or more of the ingredients mentioned in the following subclauses in quantities not exceeding the limitation, if any, specified for each ingredient (1) yeast or other leavening or aerating agent, salt, malt extract, milk, water, gluten, (2) fat, sugar and bread improver, subject to the limitation that the weight of any ingredient specified in this subclause shall not exceed 2% of the weight of flour included in the dough, (3) dried fruit, subject to the limitation that the weight thereof shall not exceed 10% of the weight of flour included in the dough, other than food packaged for sale as a unit (not being a unit designated as containing only food specifically for babies) containing two or more slices, segments, sections or other similar pieces, having a crust over substantially the whole of their outside surfaces, being a crust formed in the course of baking, frying or toasting, and (e) any of the following when supplied for human consumption without further preparation, namely (I) potato crisps, potato sticks, potato puffs and similar products made from potato, or from potato flour or from potato starch,

80

(II) savoury products made from cereal or grain, or from flour or starch derived from cereal or grain, pork scratchings, and similar products, (III) popcorn, and (IV) salted or roasted nuts whether or not in shells;

The zero rate applies to food which comes within the definition of bread above. The zero rate normally applies, therefore, to loaves, turnovers, pan loaves, soda bread, brown bread, vienna rolls, french sticks, bread rolls, some fruit loaves, bread scones etc.. Confectionery, cakes, barm bracks, biscuits, cream crackers, wafers, crispbreads etc. do not qualify for the zero rate. Materials such as flavourings, baking powders, candied peel and natural (but not artificial) sausage casings which are not normally consumed in themselves but are used as ingredients in baking and cooking qualify for zero-rating. Hot take away food is not zero rated and is liable to VAT at the 13.5% rate (see paragraph (iv) APPENDIX D).
(xiii) medicine of a kind used for human oral consumption;

To qualify for the zero-rating the medicine must be of a type that is taken through the mouth and swallowed. Such items as lozenges and pastilles are subject to the zero rate only if they are packaged and designated specifically for the treatment of a medical condition or the alleviation of discomfort arising from such a condition, and Revenue are satisfied that their use is entirely medicinal. In the case of items such as lozenges and pastilles being sold at the zero rate traders should, in their own interest, satisfy themselves that Revenue have agreed with the manufacturer or distributor that the zero rate properly applies. The zero-rating does not cover medicines for injection, gases for use in the treatment of patients, and similar products these are liable at 21%. This rate also applies to diabetic sweets and to manufactured beverages, including fruit juices and invalid wines. Chocolate, or chocolate substitute, covered biscuits as consumed by diabetics are also liable to VAT at 21%.
(xiv) medicine of a kind used for animal oral consumption, excluding medicine which is packaged, sold or otherwise designated for the use of dogs, cats, cage birds or domestic pets; (xv) seeds, plants, trees, spores, bulbs, tubers, tuberous roots, corms, crowns and rhizomes, of a kind used for sowing in order to produce food;

This category includes, for example, all vegetable seeds and fruit trees but does not include flower seeds or shrubs.
(xva) printed books and booklets including atlases but excluding (a) newspapers, periodicals, brochures, catalogues, directories and programmes, (b) books of stationery, cheque books and the like, (c) diaries, organisers, yearbooks, planners and the like the total area of whose pages consist of 25% or more of blank spaces for the recording of information, (d) albums and the like, and (e) books of stamps, of tickets or of coupons.

For more information refer to VAT Information Leaflet 10/01 on Printing and Printed matter.

81

(xvi) the supply of services consisting of work on movable goods acquired or imported for the purpose of undergoing such work within the Community and dispatched or transported out of the Community by or on behalf of the person providing the services; (xvia) the supply of transport services relating to the importation of goods where the value of such services is included in the taxable amount in accordance with section 15 (3)( of the VAT Act 1972 (as amended)); (xvii) articles of childrens personal clothing of sizes which do not exceed the sizes of those articles appropriate to children of average build of 10 years of age (a child whose age is 10 years or 10 years and a fraction of a year being taken for the purposes of this paragraph to be a child of 10 years of age), but excluding (a) articles of clothing made wholly or partly of fur skin other than garments merely trimmed with fur skin, unless the trimming has an area greater than one-fifth of the area of the outside material, and (b) articles of clothing which are not described, labelled, marked or marketed on the basis of age or size;

Broadly speaking, clothing specifically designed for the use of children in sizes up to and including 32 chest or 26 waist as appropriate qualify for the zero rate. Other sizes are liable at 21%. An explanatory leaflet is available on request. The hiring of all clothing is liable at 21%. Adults clothing, irrespective of size, is liable also at 21%. Cleaning and repair is liable at 13.5%.
(xviii) sanitary towels and sanitary tampons; (xix) articles of childrens personal footwear of sizes which do not exceed the size appropriate to children of average foot size of 10 years of age (a child whose age is 10 years or 10 years and a fraction of a year being taken for the purposes of this paragraph to be a child of 10 years of age), but excluding footwear which is not described, labelled, marked or marketed on the basis of age or size;

Broadly speaking, childrens footwear that is footwear designed specifically for the use of children up to and including sizes 5 (38 continental) qualifies for the zero rate. Other sizes are liable at 21% as is all adult footwear. However styles which are not designed specifically for children and which are manufactured in the full range of sizes from the smallest childrens sizes to large adultssizes qualify concessionally for the zero rate in sizes up to and including size 5. A VAT Information LeafletNo. 31/01 is available on request. The hiring of all footwear is liable at 21%. The repair of all footwear is liable at 13.5%. The term footwear should be understood as meaning shoes, boots, slippers etc. including fur footwear but not socks, stockings etc. . (xixa) medical equipment and appliances being (a) invalid carriages, and other vehicles (excluding mechanically propelled road vehicles), of a kind designed for use by invalids or infirm persons, (b) orthopaedic appliances, surgical belts, trusses and the like, deaf aids, and artificial limbs and other artificial parts of the body excluding artificial teeth, corrective spectacles and contact lenses, (c) walking frames and crutches,

82

(d) parts or accessories suitable for use solely or principally with any of the goods specified in subparagraphs (a), (b) and (c) of this paragraph; (xx) (a) ....... (b) wax candles and night-lights which are white and cylindrical, excluding candles and nightlights which are decorated, spiralled, tapered or perfumed.

83

Appendix C Goods and Services Chargeable at 10%

(In practice this rate no longer applies)
An extensive list of over 2,500 VAT ratings is available on the Revenue website at www.revenue.ie (i) (ii) Immovable goods being a domestic dwelling for which a contract with a private individual has been entered into before the 25th day of February, 1993, for such supply; services specified in paragraph (xiii) of APPENDIX D, under an agreement made before the 25th day of February, 1993, and at charges fixed at the time of the agreement for such supply; services specified in subparagraph (a) of paragraph (xv) of APPENDIX D, under an agreement made before the 25th day of February, 1993, and at charges fixed at the time of the agreement for such supply.

(iii)

84

Appendix D Goods and Services Chargeable at 13.5%

An extensive list of over 2,500 VAT ratings is available on the Revenue website at www.revenue.ie (i) (a) Coal, peat and other solid substances held out for sale solely as fuel,

This category includes coke, turf and firewood but not other kinds of timber. Mineralised and power methylated spirits are regarded as qualifying for the 13.5%rate, but not industrial methylated spirits.
(b) electricity: Provided that this subparagraph shall not apply to the distribution of any electricity where such distribution is wholly or mainly in connection with the distribution of communications signals, (c) gas of a kind used for domestic or industrial heating or lighting, whether in gaseous or liquid form, but not including motor vehicle gas within the meaning of section 42 (1) of the Finance Act, 1976, gas of a kind normally used for welding and cutting metals or gas sold as lighter fuel, (d) hydrocarbon oil of a kind used for domestic or industrial heating, excluding gas oil within the meaning of the Hydrocarbon (Heavy) Oil Regulations, 1989 (S.I. No. 121 of 1989)), other than gas oil which has been duly marked in accordance with Regulation 6 (2) of the said Regulations;

Hydrocarbon oils of a kind used for domestic or industrial heating are liable at the 13.5% rate, as are marked gas oil, paraffin, kerosene jet fuel, marine diesel and tractor diesel. Petrol, road diesel, industrial methylated spirits, other gas oils and LPG motor gas are liable at the 21% rate.
(ii) the provision of food and drink of a kind specified in paragraph (xii) of APPENDIX B, (in other words zero rated), in a form suitable for human consumption without further preparation (a) by means of a vending machine, (b) in the course of operating a hotel, restaurant, cafe, refreshment house, canteen, establishment licensed for the sale for consumption on the premises of intoxicating liquor, catering business or similar business, or (c) in the course of operating any other business in connection with the carrying on of which facilities are provided for the consumption of the food or drink supplied; (iii) the supply, in the course of the provision of a meal, of goods of a kind specified in subparagraph (c), (d) or (e) of paragraph (xii) of APPENDIX B, and fruit juices other than fruit juices chargeable with a duty of excise (a) in the course of operating a hotel, restaurant, cafe, refreshment house, canteen, establishment licensed for the sale for consumption on the premises of intoxicating liquor, catering business or similar business, or

85

(b) in the course of operating any other business in connection with the carrying on of which facilities are provided for the consumption of the food or drink supplied; (iv) the supply of food and drink (other than beverages specified in subparagraph (a) or (b) of paragraph (xii) of APPENDIX B), which is, or includes, food and drink which (a) has been heated for the purpose of enabling it to be consumed at a temperature above the ambient air temperature, or (b) has been retained heated after cooking for the purpose of enabling it to be consumed at a temperature above the ambient air temperature, or (c) is supplied, while still warm after cooking, for the purpose of enabling it to be consumed at a temperature above the ambient air temperature, and is above the ambient air temperature at the time of supply;

All supplies of hot take-away food, including cooked chickens, have been liable at the reduced rate of VAT since July 1986. However, the supply of freshly baked bread which may have retained some heat after baking (but has not been maintained heated) qualifies for the zero rate of VAT.
(v) (vi) promotion of and admissions to cinematographic performances; promotion of and admissions to live theatrical or musical performances, excluding (a) dances, and (b) performances specified in paragraph (viii) of APPENDIX A; (vii) amusement services of the kind normally supplied in fairgrounds or amusement parks: Provided that this paragraph shall not apply to (I) services consisting of dances, (II) services consisting of circuses, (III) services consisting of gaming, as defined in section 2 of the Gaming and Lotteries Act, 1956 (including services provided by means of a gaming machine of the kind referred to in section 43 of the Finance Act, 1975), or (IV) services provided by means of an amusement machine of the kind referred to in section 120 of the Finance Act, 1992; (viia) the provision by a person other than a non-profit making organisation of facilities for taking part in sporting activities;

See Statement of Practice (SP-VAT/4/92) for details.

(viib) the provision by a member-owned golf club of facilities for taking part in golf to any person, other than an individual whose membership subscription to that club at the time the facilities are used by that individual entitles that individual to use such facilities without further charge on at least 200 days (including the day on which such facilities are used by that individual) in a continuous period of twelve months, where the total consideration received by that club for the provision of such facilities has exceeded or is likely to exceed

86

25,500 in any continuous period of twelve months and, for the purposes of this paragraph, the provision of facilities for taking part in golf shall not include the provision of facilities for taking part in pitch and putt; (viic) the provision by a non-profit making organisation, other than an organisation referred to in paragraph (viib), of facilities for taking part in golf to any person where the total consideration received by that organisation for the provision of such facilities has exceeded or is likely to exceed 25,500 in any continuous period of twelve months and, for the purposes of this paragraph, the provision of facilities for taking part in golf shall not include the provision of facilities for taking part in pitch and putt;

See Statement of Practice (SP-VAT/1/95) for details.

(viii) (ix) services consisting of the acceptance for disposal of waste material; admissions to exhibitions, of the kind normally held in museums and art galleries, of objects of historical, cultural, artistic or scientific interest not being services of the kind specified in paragraph (viiia) of APPENDIX A; services of a kind supplied in the course of their profession by veterinary surgeons; agricultural services consisting of (a) field work, reaping, mowing, threshing, baling, harvesting, sowing and planting, (ai) stock-minding, stock-rearing, farm relief services and farm advisory services (other than farm accountancy or farm management services), (b) disinfecting and ensilage of agricultural products, (c) destruction of weeds and pests and dusting and spraying of crops and land, (d) lopping, tree felling and similar forestry services; (xia) nursery or garden centre stock consisting of live plants, live trees, live shrubs, bulbs, roots and the like, not being of a type specified in paragraph (xv) of APPENDIX B, and cut flowers and ornamental foliage not being artificial or dried flowers or foliage;

(x) (xi)

See Statement of Practice (SP-VAT/1/97) for information.

(xib) (xic) (xid) (xii) animal insemination services; livestock semen; live poultry and live ostriches; printed matter consisting of: (a) newspapers and periodicals; (b) brochures, leaflets and programmes; (c) catalogues, including directories, and similar printed matter; (d) maps, hydrographic and similar charts;

87

(e) printed music other than in book or booklet form; but excluding: (i) (ii) (iii) other printed matter wholly or substantially devoted to advertising, goods specified in subparagraphs (b) to (e) of paragraph (xva) of APPENDIX B, and any other printed matter;

A VAT Information leaflet No 10/01 is available on Printing and Printed Matter.

(xiii) (a) letting of immovable goods (other than in the course of the provision of facilities of the kind specified in paragraph (viia)) (I) (II) by a hotel or guesthouse, or by a similar establishment which provides accommodation for visitors or travellers, in a house, apartment or other similar establishment which is advertised or held out as being holiday accommodation or accommodation for visitors or travellers, or

(III) in a caravan park, camping site or other similar establishment, or (b) the provision of accommodation which is advertised or held out as holiday accommodation;

Other short-term lettings are exempt unless the lessor waives his exemption, in which case the 21% rate applies.
(xiv) (xv) tour guide services; the hiring (in this paragraph referred to as the current hiring) to a person of (a) a vehicle designed and constructed, or adapted, for the conveyance of persons by road, (b) a ship, boat or other vessel designed and constructed for the conveyance of passengers and not exceeding 15 tonnes gross, (c) a sports or pleasure boat of any description, or (d) a caravan, mobile home, tent or trailer tent, under an agreement, other than a hire-purchase agreement, for any term or part of a term which, when added to the term of any such hiring (whether of the same goods or of other goods of the same kind) to the same person during the period of 12 months ending on the date of the commencement of the current hiring, does not exceed 5 weeks;

Only short-term hire of cars, caravans etc. qualifies for the 13.5% rate. Longer term hire is liable at 21%.

88

(xvi)

a work of art being (a) a painting, drawing or pastel, or any combination thereof, executed entirely by hand, excluding hand decorated manufactured articles and plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes, (b) an original lithograph, engraving, or print, or any combination thereof, produced directly from lithographic stones, plates or other engraved surfaces, which are executed entirely by hand, or (c) an original sculpture or statuary, excluding mass-produced reproductions and works or craftsmanship of a commercial character, but excluding the supply of such work of art by a taxable dealer in accordance with the provisions of subsection (3) or (8) of section 10A or by an auctioneer within the meaning of section 10B and in accordance with the provisions of subsection (3) of Section 10B [of the VAT Act];

(xvia) antiques being, subject to and in accordance with regulations, articles of furniture, silver, glass or porcelain, whether hand-decorated or not, specified in the said regulations, which are shown to the satisfaction of the Revenue Commissioners to be more than 100 years old, other than goods specified in paragraph (xvi), but excluding the supply of such antiques by a taxable dealer in accordance with the provisions of subsection (3) or (8) of section 10A or by an auctioneer within the meaning of section 10B and in accordance with the provisions of subsection (3) of section 10B [of the VAT Act]; (xvii) (xviii) literary manuscripts certified by the Director of the National Library as being of major national importance and of either cultural or artistic importance; services consisting of (a) the repair or maintenance of movable goods, or (b) the alteration of used movable goods, other than contract work or such services specified in paragraph (v), (va) or (xvi) of APPENDIX B, but excluding the provision in the course of any such repair, maintenance or alteration service of (I) (II) (xix) accessories, attachments or batteries, or tyres, tyre cases, interchangeable tyre treads, inner tubes and tyre flaps, for wheels of all kinds;

services consisting of the care of the human body, excluding such services specified in APPENDIX A, but including services supplied in the course of a health studio business or similar business; services supplied in the course of their profession by jockeys; greyhound feeding stuff, which is packaged, advertised or held out for sale solely as greyhound feeding stuff, and which is supplied in units of not less than 10 kilograms; the supply to a person of photographic prints (other than goods produced by means of a photocopying process), slides or negatives, which have been produced from goods provided by that person;

(xx) (xxa) (xxi)

89

(xxii)

goods being(a) photographic prints (other than goods produced by means of a photocopying process), mounted or unmounted, but unframed, (b) slides and negatives, and (c) cinematographic and video film, which record particular persons, objects or events, supplied under an agreement to photograph those persons, objects or events;

(xxiii)

the supply by a photographer of (a) negatives which have been produced from film exposed for the purpose of his business, and (b) film which has been exposed for the purposes of his business;

(xxiv) photographic prints produced by means of a vending machine which incorporates a camera and developing and printing equipment; (xxv) services consisting of (a) the editing of photographic, cinematographic and video film, and (a) microfilming; (xxvi) agency services in regard to a supply specified in paragraph (xxi); (xxvii) instruction in the driving of mechanically propelled road vehicles, not being education, training or retraining of the kinds specified in paragraph (ii) of APPENDIX A; (xxviii) immovable goods; (that is buildings, houses etc.) (xxix) services consisting of the development of immovable goods and work on immovable goods including the installation of fixtures, where the value of movable goods (if any) provided in pursuance of an agreement in relation to such services does not exceed two-thirds of the total amount on which tax is chargeable in respect of the agreement; (xxx) services consisting of the routine cleaning of immovable goods;

(xxxi) food of a kind used for human consumption, other than that included in paragraph (xii) of APPENDIX B being flour or egg based bakery products including cakes, crackers, wafers and biscuits, but excluding (a) wafers and biscuits wholly or partly covered or decorated with chocolate or some other product similar in taste and appearance, (b) food of a kind specified in subparagraph (c) or (e) (II) of paragraph (xii) of APPENDIX B, and (c) chocolates, sweets and similar confectionery; (c) chocolates, sweets and similar confectionery;

90

(xxxii) concrete ready to pour but excluding the supply of such goods by a taxable dealer in accordance with the provisions of subsection (3) or (8) of section 10Aor by an auctioneer within the meaning of section 10B and in accordance with the provisions of subsection (3) of section 10B [of the VAT Act]; (xxxiii) blocks, of concrete, of a kind which comply with the specification contained in the Standard Specification (Concrete Building Blocks, Part 1, Normal Density Blocks) Declaration, 1987 (Irish Standard 20: Part 1: 1987) but excluding the supply of such goods by a taxable dealer in accordance with the provisions of subsection (3) or (8) of section 10Aor by an auctioneer within the meaning of section 10B and in accordance with the provisions of subsection (3) of section 10B.

Concrete bricks, other bricks, paving slabs etc. are not covered. These are liable at 21%.

91

Appendix E Goods and Services Chargeable at 21%

All goods and services which are not specified in Appendices A, B, C, D, and Appendix F in certain circumstances as being exempt or liable at the zero%, 10% or 13.5% rates are liable at 21%. The only exceptions are live cattle, sheep, goats, pigs, deer and horses which are liable at 4.3%. It is virtually impossible to compile a comprehensive list of all goods and services the supply of which is liable at 21%. The following are examples of the coverage of this rate. An extensive list of over 2,500 VAT ratings is available on the Revenue website at www.revenue.ie Accountancy Adhesives Agricultural machinery Aircraft (certain) Alcoholic drinks Animals (excl. live cattle, sheep, goats, pigs, deer, horses and greyhounds) Artificial flowers Audio/visual equipment Auto LPG Bathroom fittings Bicycles (short-term hire 13.5%) Binoculars Boats (short-term hire 13.5%) Buckets Building materials (most) Buttons Calendars Cameras Camping equipment (short-term hire of tents 13.5%) Car parts and accessories Cars (short-term hire 13.5%) Caravans (short-term 13.5%) Carpets Cassettes (blank and recorded) Chemicals (certain) Clocks and watches Compact discs (inc. players) Computers and calculators Consultancy Contact lenses Cookers Copy books Cosmetics Cutlery Dances Delph and glassware Detergents Diaries Diesel (unmarked) Disinfectants Drawing materials Educational supplies (excl. books) Electrical goods Fridges Frozen desserts Frozen yoghurts Fruit juice Fur clothing Furniture and furnishings Generators Handbags Hardware Heaters Hiring of lawnmowers, tools etc. Jewellery Kitchen equipment and utensils (incl. fridges and washing machines) Ladders Lawnmowers Light fittings Machinery Medicine (non-oral) Microscopes Mobile homes (short-term hire 13.5%)

92

Musical Instruments Note books Office equipment Ointments Optical goods Ornaments Packaging material Paper Paper serviettes etc. Pens, pencils etc. Pet food (excl. certain greyhound feeding stuff) Petrol Photocopying Picture framing Polishes Radios Records Record players Sacks Safes Savoury snack products Scissors Soap

Soft drinks Spectacles Stationery Tapes (blank and recorded) Tobacco Toll charges (roads/bridges) Tools Toothpaste Toys Travel goods TV sets Twine Umbrellas Video recorders and tapes Walking sticks Wallpaper Washing machines Water (bottled) Wrapping materials Writing pads Zips

93

Appendix F Eighth Schedule to the VAT Act, 1972 (as amended)

Works of art, collectors items and antiques chargeable at 13.5% in the circumstances specified in section 11 (1AA) of the VAT Act (i) Works of art: Every work of art being (a) a picture (other than a painting, drawing or pastel specified in paragraph (xvi) of APPENDIX D), collage or similar decorative plaque, executed entirely by hand by an artist, other than (I) plans and drawings for architectural, engineering, industrial, topographical or similar purposes, (II) hand-decorated manufactured articles, and (III) theatrical scenery, studio back-cloths or the like of painted canvas, commercial,

(b) a sculpture cast the production of which is limited to eight copies and supervised by the artist or by the artists successors in title provided that, in the case of a statuary cast produced before the 1st day of January, 1989, the limit of eight copies may be exceeded where so determined by the Revenue Commissioners. (c) a tapestry or wall textile made by hand from original designs provided by an artist, provided that there are not more than eight copies of each, (d) individual pieces of ceramics executed entirely by an artist and signed by the artist, (e) enamels on copper, executed entirely by hand, limited to eight numbered copies bearing the signature of the artist or the studio, excluding articles of jewellery, goldsmithswares and silversmiths wares, or (f) a photograph taken by an artist, printed by the artist or under the artists supervision, signed and numbered and limited to 30 copies, all sizes and mounts included, other than photographs specified in paragraph (xxii) (a) of APPENDIX D;

(ii) Collectors items: Every collectors item being one or more (a) postage or revenue stamps, postmarks, first-day covers, pre-stamped stationery and the like, franked, or if unfranked not being of legal tender and not being intended for use as legal tender, or (b) collections and collectors pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest; (iii) Antiques: Every antique being, subject to and in accordance with regulations, one or more goods which are shown to the satisfaction of the Revenue Commissioners to be more than 100 years old, other than goods specified in paragraph (xvi), (xvia) or (xxii) (a) of APPENDIX D or in paragraph (i) or (ii) of this Appendix.

94

Appendix G Fourth Schedule to the VAT Act, 1972 (as amended)

Services that, where taxable, are taxed where received (i) Transfers and assignments of copyright, patents, licences, trade marks and similar rights;

(ia) hiring out of movable goods other than means of transport; (ii) advertising services; (iii) services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services, data processing and provision of information (but excluding services connected with immovable goods); (iiia) telecommunications services; (iv) acceptance of any obligation to refrain from pursuing or exercising in whole or in part, any business activity or any such rights as are referred to in paragraph (i); (v) banking, financial and insurance services (including re-insurance, but not including the provision of safe deposit facilities); (vi) the provision of staff; (vii) the services of agents who act in the name and for the account of a principal when procuring for him any services specified in paragraphs (i) to (vi).

95

Appendix H
The following publications are available on the Revenue website at www.revenue.ie .

Statements of Practice
Deductible Tax Live Horses Automated Entry Processing for Imports/Exports Veterinary Services Advertising Services Spots Facilities Electronic Invoicing (E.D.I.) Payment of VAT on Alcohol Products at time of Payment of Excise Duty Golf and other Sporting Activities Abolition of Duty-Free Sales to Travellers on Intra-Community Journeys SP-VAT/2/90 SP-VAT/3/90 SP-VAT/2/91 SP-VAT/3/91 SP-VAT/3/92 SP-VAT/4/92 SP-VAT/9/92 SP-VAT/3/93 SP-VAT/1/95 SP-VAT/1/99

Booklets
VAT Leaflet No. 1 Schemes for Retailers VAT and Financial Services VAT and Property Transactions VAT A Guide to Apportionment of Input Tax Sept 1973 June 1999 Oct 2001 Oct 2001

VAT Information Leaflets, Technical Briefing and Notes

Value-Added Tax Racehorse Trainers VAT on Goods and Services Supplied to Property Lessees through Landlords (Service Charges) Value-Added Footwear and Clothing VAT Treatment of Triangulation in the E.C. Single Market VAT Invoice and other Documents VAT Treatment of Second-Hand Vehicles European Communities (Value-Added Tax) Regulations, 1995 Tax Free Purchases for non-EU Tourists Plant and Machinery May 1985 Sept 1987 July 1992 Oct 1992 Oct 1995 Jan 1996 April 1998 Oct 1998 1985

96

VAT on Property Claims for Repayment of VAT arising out of the Supreme Court Judgement in the Case of Erin Executor for Periods Prior to 27/3/98 VAT Treatment of Auctioneers and Auction and Agency sales ECJ Judgements in Relation to the VAT Treatment Promotional Schemes VAT on Telecommunications VAT Treatment of Foreign Firms doing Business in Ireland VAT Treatment of Building and Associated Services VAT Treatment of International Leasing of Means of Transport Emergency Accommodation, including Asylum Seekers and Homeless People Research Services carried out by Third Level Educational Bodies Intra-Community Acquisitions and Postponed Accounting Distance Sales in the Single Market Fourth Schedule Services Printing and Printed Matter Government Departments, Local Authorities, Health Boards, Hospitals, Educational Bodies and other Non-Taxable entities Acquiring Goods from Other EU Member States Farmers and Intra-EU Transactions Financial Institutions, Insurance Companies, Theatres, Providers of Passenger Transport and Other Exempt Persons Acquiring Goods from Other EU Member States VAT and Gifts VAT and Solicitors VAT Treatment of Goods Transport and Ancillary Services between - EU Countries VAT Treatment of Second-Hand Goods The Margin Scheme Repayments to Unregistered Persons Rates of VAT on Food and Drink VAT on Dances Zero-Rating of Goods and Services in Accordance with Section 13A Monies Received Basis of Accounting Agricultural Services Horticultural Retailers Intra-Community Supplies VAT and Footwear Transfer of a Business or Part Thereof 16/01 17/01 18/01 19/01 20/01 21/01 22/01 23/01 24/01 26/01 31/01 1/02 13/01 14/01 15/01 11/01 12/01 3/98 5/98 6/98 7/98 1/99 2/99 3/99 1/01 2/01 7/01 8/01 9/01 10/01

97

A Letter of Expression of Doubt VAT Treatment of Cultural, Artistic, and Entertainment Services Supplied by Non-Established Persons

2/02 3/02

98

Appendix I

99

Appendix J
Useful Addresses, Telephone, Fax Numbers and E-mail
Local Offices ATHLONE Government Buildings, Pearse Street, Athlone, Co. Westmeath. Tel: 0902-21800 Fax: 0902-24221 E-mail: [email protected] CASTLEBAR Michael Davitt House, Castlebar, Co. Mayo. Tel: 094-21344 Fax: 094-24221 E-mail: [email protected] CORK Government Buildings, Sullivans Quay, Cork. Tel: 021-4966077 / 021-4962597 Fax: 021-4962141 E-mail: [email protected] DUBLIN DAD 1- (Construction Industry) The Plaza Complex, Belgard Road, Tallaght, Dublin 24. Tel: 01-6470700 Fax: 01-6341883 E-mail: [email protected] DAD 2-(Property Development) The Plaza Complex Belgard Road, Tallaght, Dublin 24. Tel: 01-6470700 Fax: 01-6341980 E-mail: [email protected] DAD 3- (Professions) Dublin Audit District 3, Hawkins House, Hawkins Street, Dublin 2. Tel: 01-6775004 Fax: 01-6775003 E-mail: [email protected] DAD 4- (Agribusiness & Fisheries) Dublin Audit District 4, The Plaza Complex, Belgard Road, Dublin 24. Tel: 01-6470700 Fax: 01-6341885 E-mail: [email protected] DAD 5-(The Financial Sector) Lansdowne House, Lansdowne Road, Ballsbridge, Dublin 4. Tel: 01-6689400 Fax: 01-6604316 E-mail: [email protected] DAD 6-(Group, Foreign Branches and PLC) Lansdowne House, Lansdowne Road, Ballsbridge, Dublin 4. Tel: 01-6689400 Fax: 01-6689706 E-mail: [email protected]

102

DAD 7- (Investment &Rental Income) Hibernian House, Lansdowne House, Lansdowne Road, Ballsbridge, Dublin 4. Tel: 01-6689400 / 01-6316700 Fax: 01-6316853 E-mail: [email protected] DAD 8-(Transport/ Light industry) The Plaza Complex, Belgard Road, Tallaght, Dublin 24. Tel: 01-6470700 Fax: 01-6341884 E-mail: [email protected] DAD 9-(Hotel, Catering and Entertainment Industry, Personal Services and other Miscellaneous Services Activities) 4, Claremont Road, Sandymount, Dublin 4. Tel: 01-6607111 Fax: 01-6606768 E-mail: [email protected] DAD 10-(Wholesalers& Retailers) 4, Claremont Road, Sandymount, Dublin 4. Tel: 01-6607111 Fax: 01-6606580 E-mail: [email protected] DUNDALK Government Buildings, Alphonsus Road, Dundalk, Co. Louth. Tel: 042-9332251 / 042-9331952 Fax: 042-9334609 / 042-9330661 E-mail: [email protected]

GALWAY Eyre Square, Galway. Tel: 091-563041 Fax: 091-563987 E-mail: [email protected]

KILKENNY Government Buildings, Hebron Road, Kilkenny. Tel: 056-52222 Fax: 056-60888 E-mail: [email protected] LETTERKENNY Government Buildings, High Road, Letterkenny, Co. Donegal. Tel: 074-21299 Fax: 074-27775 E-mail: donegtax@revenue LIMERICK River House, Charlotte Quay, Limerick. Tel: 061-318711 Fax: 061-312122 E-mail: [email protected] SLIGO Government Buildings, Cranmore Road, Sligo. Tel: 071-60322 Fax: 071-43987 E-mail: [email protected]

103

THURLES Government Buildings, Thurles, Co. Tipperary. Tel: 0504-21544 Fax: 0504-28769 E-mail: [email protected] TRALEE Government Offices, Spa Road, Tralee, Co. Kerry. Tel: 066-7121844 / 066-83000 Fax: 066-7121895 E-mail: [email protected]

WATERFORD Government Buildings, The Glen, Waterford. Tel: 051-873565 Fax: 051-877483 E-mail: [email protected] WEXFORD Government Offices Anne Street, Wexford. Tel: 053-45555 Fax: 053-47208 E-mail: [email protected]

Other Offices Collector-Generals Division Sarsfield House, Francis Street, Limerick. Tel: 061-310310 Lo call: 1890-203070 Fax: 061-401015 E-mail: [email protected] Taxes Central Registration Office rus Brugha, 9/15 Upper OConnell Street, Dublin 1. Tel: 01-8746821 Fax: 01-8746078 E-mail: [email protected] VAT Interpretation Branch Stamping Building, Dublin Castle, Dublin 2. Tel: 01-6745000 Fax: 01-6795236 Email: [email protected] VAT Repayments (Unregistered) Section Government Offices, Kilrush Road, Ennis, Co. Clare. Tel: 065-6841200 Fax: 065-6849248 E-mail: [email protected] VAT Repayments (Registered) Section Government Offices, Kilrush Road, Ennis, Co. Clare. Tel: 065-6849000 Lo-call: 1890-202033 Fax: 065-6841366 E-mail: [email protected] VIMA Office Newry Road Dundalk, Co. Louth Tel: 042-9326262 Lo-call: 1890-251010 Fax: 042-9353388 E-mail: [email protected]

Revenue Website- www.revenue.ie

104

Index
A Accounting, Basis of - invoice basis, 1.10, 8.1 - moneys received basis, 1.10, Ch. 8 - changes in basis of accounting, 8.9, 8.10 Accounting for VAT, Ch. 7 Advance payments, 3.8, 6.2, 9.9, 16.4 Advertising, App. E, 4.8 Agency services, 4.3 Amount taxable - on supplies of goods and services, Ch. 5 - on imported goods, 13.5, 13.7 - on trade-ins, 5.3 - on new motor vehicles, 5.4 Antiques, App. F Appeal Commissioners, 15.11 Appeals- right of appeal, 1.18 - formal determination of liability, 15.11 - estimates and assessments, 7.8 - letter of expression of doubt, 15.12 Apportionment, 6.6 Assessments, 7.8, Auction & agency sales, 3.10, 5.3 B Bad debts, 5.9 Bankruptcy, VAT as preferential debt, 7.10 Basis of accountingsee Accounting Book tokens, vouchers, 3.6 Building and associated services, Ch. 17 C Cancellation of registration, 2.11 Car / vehicle hire not deductible, 6.7 Catering services, App. D - self supply, 4.12 Chain of traders, 3.12 Changes in the rates of tax, Ch. 16 Containers and packaging, 5.6 Contract work, 4.10 Contractors, building and other, 16.5, Ch. 17 Copyright, App. G Credit card transactions, 8.8 Credit notes, Ch. 9 - persons who must issue, 8.11 - goods returned, discounts, bad debts etc., 5.9, 10.4 Credit-sales and hire -purchase, 3.1, 16.6 Credits, Tax, Ch. 6, 13.10, 14.3 Customs-free zone, Shannon, 13.15 D Dances, 5.10 Debit notes, 9.4 Deductible tax, Ch. 6, 13.10, 14.3 Deferred payment scheme, 13.7, 13.10 Demurrage, 13.14 Determination of rate of liability, 15.10, 15.11 Disabled persons - repayment of tax, 15.8 Discounts, 5.9, 10.4 Distance selling, 2.2, 11.11 Do-it-yourself, 17.7 Dual-use inputs, 6.6 E Economic value, 17.8 Electronic (paperless) invoices 9.11, 10.8 Estimates, 7.8 Exemptions - meaning, 15.6, 15.7 - list of exempted activities, App. A Excisable goods, 2.5, 6.2, 7.9, 11.12 Exports, Ch. 14 Expression of doubt, 1.19, 15.12 F Farmers - flat-rate addition, 1.6 - purchases from unregistered farmers, 6.11 - Intra-Community acquisitions, 12.9, 15.9 - repayment to, 15.8 Financial Services, Ch. 18 Fishermen - repayment to, 15.8 Fittings, 17.5 Fixtures, 17.3 Food, rates of tax, App. B, App. D Foreign firms - registration, 2.2 - repayment of tax, 1.16 Fourth Schedule services, 2.6, 4.8, 4.9, App G Franc De Droits (F.D.D.), 13.13 Free port (Ringaskiddy), 13.16 G Gifts, 3.3

105

Goods - definition of supply, Ch. 3 - exchanged for vouchers, tokens etc., 3.6 - liable at the zero rate, App. B - liable at the 13.5% rate, App. D - liable at the 21% rate, App. E - mixed transactions, 5.8 - non-taxable supplies of, 3.13 - replacement, 3.5 - samples, 3.4 - self-supplies, 3.2 - sold through agent, 3.10 - supplied to tourists etc., 14.2 - transport of, 11.13 Government Departments, 1.5, Greyhounds see livestock Group registration 2.13, 13.9, 18.8 H Hire-purchase and credit-sale, 3.1, 16.6 Hire, car / vehicle, 4.11, 6.8 Hiring and leasing, 2.6, 4.1, 6.8 Hotels and catering, App. D, 4.12 How to complete the VAT return, 7.6, App I I Imports, Ch. 13 - when VAT is payable, Ch. 7, Ch. 13 Inspection of records, 10.9 Inspectors of Taxes, list of offices, App. J Insurance, 18.7 Interest on late returns, 7.7 Intra-Community trade - supplies, Ch. 11 - acquisitions, Ch. 12, 15.9 Instrastat returns, 11.15, 12.14 Invoices, Ch. 9, 16.2 L Land and buildings, 4.5, Ch. 17 Leasing of means of transport, 4.11 Liquidation, VAT as a preferential debt, 7.10 Livestock, 1.2, 15.1 Local authorities, 1.5, 4.9 M Margin Scheme, 5.3 Microfilmed records, 10.7 Mixed transactions -goods and services at different rates, 5.8 Moneys received basis of accounting, Ch. 8 - changes in the rates of VAT, Ch. 16

Motor vehicles - definition of, 6.8 - hire of vehicles, 4.11, 6.7 - deduction on certain motor vehicles, 6.12 N Non-deductible VAT, 6.7 Non-taxable entities, 1.5, 12.4 O Offices, list of VAT, App. J Option to register for VAT, 2.8 P Parcel post importations, 13.11, 13.12 Package rule, 5.8 Packing and containers, 5.6 Passenger transport, 4.6, App. A Payment in advance, 3.8, 6.2, 9.9, 16.4 Penalties, 9.1, 9.8, 11.10 Postage and Insurance, 5.7 Preferential debt, VAT as a, 7.10 Price adjustment, 9.5, 9.6, 10.4, Ch. 16 Property transactions, 3.11, 4.5, 17.8 Purchases records, 10.2 Q Quay rent, 13.14 R Rates of tax, Ch. 15 -on mixed goods/services sold for an inclusive price, 5.8 - changes in the rates of VAT, Ch. 16 Racehorse trainers, 12.10 Records to be kept, Ch. 10 - required in connection with exports, 14.4 Reduction in price, 9.6, 10.4 Refunds, tax, 1.17, 7.6, 15.8 Registration, Ch. 2, 1.7 Reimbursements of expenditure, 5.7 Rents, waiver of exemption, 1.4, 2.16 Repayment to unregistered persons 1.17, 15.8 Replacement goods, 3.5 Retail export scheme, 14.2 Retailers, schemes for, 8.12 Returnable containers, 5.6 Returned goods, 5.9 Returns, VAT, Ch. 7 - how to complete, App. I - monthly, 14.3 Ringaskiddy free port, 13.16

106

S Sales records, 10.3 Self-supplies - of goods 3.2 - of services 4.12 Services, Ch. 4 - building services, Ch. 17 - financial services, Ch.18 Settlement vouchers, 9.4 Shannon customs-free zone, 13.15 Single market, Ch. 11, Ch. 12 Staff, App. G State Departments, 1.5, 15.6 Stock-in-trade, 2.12 Supplies of goods, Ch. 3 T Tax payable and tax refundable, Ch. 6 Tax - repayments, 1.17, 7.6, 15.8 - returns, Ch. 7, App. I - when payable, 7.1 Taxable amount - on trade-ins, 5.3, 6.12 - on supplies of goods, Ch. 3, - on supplies of services, Ch. 4 - on imported goods, 13.2, 13.5 - on intra-Community acquisitions, Ch. 12 - on credit card transactions, 8.8 Taxable persons - meaning, 2.1 - records to be kept by, Ch. 10 Thresholds, 2.2, 11.11, Ch 19 Telecommunications, 3.7, 4.8, 4.9, App. G Time limits, 6.14, 7.1, 9.3, 10.5 Tokens (gift and book), 3.6 Toll charges, App E Tourists, purchases by, 14.2 Trade-ins, amount taxable, 5.3, 6.12 Transfer of ownership of business, 3.13 Transport (ancillary activities), 4.6 Triangulation, 11.7 "Two-thirds" rule, 3.9, 4.2, 17.4 U Unjust enrichment, 7.11 V Vehicle hire, 6.8, 4.11 VIES returns, 11.14

Vouchers - gift and book, 3.6 - settlement, 9.4 W Waiver of exemption, 1.4, 2.16 Withholding tax, 8.6, 8.7 Works of Art, 5.3, App. 5 Z Zero-rate - list of goods and services, App. B - 13A Scheme, 13.3, 15.3.

107