Acquisitions from other EU Member States

Updated on April 9, 2022

Overview

When items are sent or transported between companies in different EU member states, this is known as intra-community supply and acquisition (EU). Two transactions are assessed to have taken place for VAT purposes:

Acquisition of goods and services from within the community (ICA) (ICS).
The ICA of commodities is addressed in this section. An ICA is a transaction in which a company in one EU member state buys movable goods from a company in another EU member state. In these transactions, the buyer is responsible for paying the VAT as if he or she had actually made the supply.

This paragraph explains:

The definition of VAT self-accounting
when you are forced to register for VAT because of your ICAs and account for VAT on branch-to-branch transfers, what information regarding your ICAs must you supply to Revenue?
This is what occurs when you buy a new mode of transportation from another EU member state, as reported by VIES and Intrastat.

Self accounting for Value-Added Tax (VAT)

The purchaser is obligated to pay a “reverse fee” under intra-Community acquisition (ICA) regulations. As a result, when purchasing items from other EU countries, the business customer is responsible for paying VAT.

An intra-Community supply has been made by the provider in another Member State (ICS).

This is how it works:

As an ICS, the supply is tax-free in the country of origin.
VAT is charged to the buyer at the time of purchase.
It is the buyer’s responsibility to include VAT in their VAT filing. The appropriate VAT rate is that of the Member State in which they are located.
ICA input credits can be reclaimed in the same VAT return, and the purchaser must account for VAT on any subsequent delivery of the goods if they are entitled to an input credit.
Example
In January 2016, a dealer in Ireland purchased €5,000 worth of items from a German company. Their taxable sales necessitated the purchase of these products. To qualify for a zero-rate in Germany, the German company does not charge VAT on intra-Community supply to Ireland.

If you’re an Irish business, you have to charge yourself VAT at the usual rate of 23%, which is €1,150. But the Irish dealer is entitled to claim an input credit of €1,150, since the products were purchased for use in the production of their taxable goods.

Events have occurred that are subject to tax:

First, the zero-rate intra-Community supply provided by the German supplier.

the purchase of goods and services in Ireland at an appropriate rate for that country’s purchasers.

The VAT 3 return of an Irish trader for January/February 2016.
Types of VAT tax responsibilities.
T1 deductible in full (VAT on sales)
T2: €1,150 T2 (VAT on purchases)
One thousand one hundred fifty euros, type 3 (VAT payable)
None of the above choices (VAT repayable)
E1 is a void (value of goods sent to other EU countries)
E2 is 0 (value of goods received from other EU countries)
€5,000
Irish traders who sell their goods to customers in the Republic of Ireland are responsible for paying VAT to Revenue at a rate of 23 percent.

What information on your ICAs must you submit to Revenue?

Value-Added Tax (VAT) 3 returns must include information on all intra-Community acquisitions (ICAs). T1 (sales) box must be filled in with the appropriate Irish VAT rate.

If the purchase is deductible for VAT reasons, you can recover the VAT in the T2 (purchases) box.

The E2 (ICAs) box must contain the value of the purchased goods.

As part of your yearly RTD form, you must also submit information about your ICAs.

ICAs are taxed at what rate?
On this date, VAT is due.

the 15th of the month after the acquisition, or the date of the invoice’s issuance if none is sent.
You must submit your VAT return for the period for which VAT is due in order to claim your refund.

The cost of the items is deducted from the total amount charged for the purpose of calculating the VAT. Using the rate of exchange effective when the VAT is due is a good rule of thumb for foreign currency invoices.

Because of intra-Community acquisitions (ICAs), how often do you need to be registered?

When are you required to register solely because of intra-Community acquisitions (ICAs)?

VAT-registered businesses must self-report all intra-Community acquisitions (ICAs), which are not subject to a different threshold.

However, this may be the case in the following:

ICAs of goods with a value of more than €41,000 must be registered if the value is likely to reach €41,000 for a continuous period of 12 months for tax exempt businesses and other organisations.

The following are just a few examples of the type of business we’re talking about:

Examples of this type of organisation include insurance companies, building societies, government agencies, hospitals, and non-profits.
These organisations must pay VAT on the ICAs they issue. VAT paid on ICAs cannot be deducted by such organisations in general.

Example
If you buy something for your personal use worth €5,000 from a French company that is VAT registered but does not engage in any tax-exempt activity, you must pay VAT.

According to the VAT Return filed by the insurance company, it paid a VAT of €1,150. For the insurance firm, there is no way to take credit for what they’ve accomplished. The insurance company is obligated to make a payment of €1,150 to Revenue.

For next year’s VAT 3 returns, the deadlines are January and February of 2017.
The first (VAT on sales) One thousand and fifteen Euros (T2) (VAT on purchases) Purchases are subject to VAT (Value Added Tax).
In other words, N/A: €1,150 T4 T4 (VAT repayable)
E1 is an empty space (value of goods sent to other EU countries)
E2 is set to 0. (value of goods received from other EU countries)
€5,000

What are VIES and Intrastat?

For VAT-registered traders involved in the acquisition of products and intra-Community supplies, additional reporting requirements apply.

Intrastat VAT Information Exchange System
In order to verify the veracity of zero-rating claims, the VAT Information Exchange System (VIES) provides a system that can be used by each Member State. When zero-rated commodities are moved between Member States, it helps to identify any unreported movements.

To verify the VAT registration numbers of their customers in different EU Member States, VIES is available to businesses. Customers can verify the validity of VAT numbers by using this feature. Intra-EU trade is solely covered by the VIES system.

In order for VAT-registered businesses to report their EU sales, they must file periodic returns. You’ll find more specifics on your VIES reporting responsibilities in the additional guidelines.

Intrastat
Stats on the movement of commodities, not services, between EU member states are collected by Intrastat. It is important to note that intra-EU trade data are not based on the ownership of the commodities themselves. Only their physical movement is relevant here.

Intrastat is covered in greater depth in the accompanying advice.

Intra-Community acquisitions (ICAs) of alcohol products

When purchasing alcoholic beverages within the EU, VAT must be paid in addition to the local excise charge. On the invoiced price of the products, VAT is charged in addition to the excise duty due.

What is the procedure for halting one’s work?
Regardless of where the alcohol comes from (imports, EU ICAs, or home production), there is no VAT due on supplies of alcoholic beverages held under a duty suspension arrangement.

The ultimate supply of alcohol products is liable to VAT, not the supply made while the duty suspension is in effect. The excise duty and VAT must be paid at the same time as the items are taken out of duty suspension. Please discard any past supply, be it EU ICA or imports.

It is not possible to charge the VAT payable on such a final supply on the VAT invoice issued at the time of the provision. Instead, the owner will be responsible for paying it along with the excise duty when the products are removed from duty suspension.

A duty suspension arrangement is in effect when alcoholic beverages are supplied.

The seller should not charge VAT.
Any invoice for the supply should not include VAT.
Additional information on the ICAs of alcoholic beverages can be found in additional guidelines.

Acquisitions of new means of transport from another Member State

There will be an Irish VAT charge if you import a new car from another EU member state into Ireland (VAT). A new mode of transportation could be any one of these three new forms of transportation. The necessary data is shown in the following table.

For VAT reasons, a new mode of transportation.
Specifying “new” for a brand new car
greater or equal to 7.2 kW, or 48 cc.
Six months old or less, a ship or boat on the sea is considered new.
boats under 3 months old or boats with less than 100 hours of sailing experience of 7.5 metres in length
Aircraft
a maximum takeoff mass of 1,550 kg
Airborne for at least 40 hours but not yet more than three months
New modes of transportation shouldn’t be taxed right away.
the most recent models of autos
If you buy a brand-new car, you’ll have to pay Vehicle Registration Tax (VRT) and VAT.

individuals who aren’t eligible for a VAT rebate.
Intra-Community acquisitions are exempt from VRT, and VAT must be paid by the 15th of the following month.

Ships and planes that have never been seen before
The VAT on the acquisition of a new vessel or aircraft is collected by the local Customs office:

Individuals who stand on their own two feet.
Individuals who aren’t otherwise qualified.
Within three days after arriving in the state, you must pay the state’s VAT.

For those who have to face the consequences of their actions
When purchasing a new mode of transportation, everyone who is eligible for a VAT refund on the purchase must submit a VAT return.