Acquisitions from other EU Member States

Updated on February 8, 2022

Overview

Internal supply and acquisition” is a term used when goods are moved or sent between EU member states (EU). For VAT reasons, the following two transactions are considered to have taken place:

acquisitions made within a short distance of each other (ICA)

and

trade and commerce within the community (ICS).

This section discusses the ICA of commodities. One EU member state buys moveable goods from another EU member state in an ICA transaction. In these transactions, the buyer is liable for the VAT as if he or she had made the supply.

 

In this section, we’ll go over:

 

What’s Called “Self-Accounting for VAT”

ICA information you need to provide to Revenue.

You must file for VAT when your ICAs need it.

Which branch-to-branch transactions are subject to VAT?

whether or whether the data provided by VIES and Intrastat is indeed useful

What happens if you buy a new car from outside the EU?

Self accounting for Value-Added Tax (VAT)

A “reverse fee” must be paid by the buyer in accordance with intra-Community acquisition (ICA) requirements. As a result, when purchasing items from other EU countries, the business customer is responsible for paying VAT.

The supplier in another Member State has made an intra-Community supply (ICS).

As a more succinct way of saying it:

Zero-rated supplies are ICSs in the country of origin.
The purchaser is responsible for the payment of VAT on the items they purchase.
Buyers are required to submit a VAT return in order to account for VAT on their purchases. The VAT rate that is applicable is the rate that is in effect in the Member State where they reside.
To claim any VAT paid on ICA as an input credit on their VAT return, purchasers are required to disclose any subsequent sales of goods.
Example
A German company receives €5,000 from an Irish businessman in January 2016. The items were purchased so that taxable supplies could be made. As part of the zero-rate, the German company does not charge VAT on intra-Community sales to Ireland.

Businesses in Ireland are required to charge VAT at the regular rate, which in this case is 11.5 percent, or €1,150. However, because the materials were purchased for taxable supplies, the Irish dealer is entitled to an input credit of €1,150.

Two taxable events have occurred:

1) the German supplier’s zero-rate intra-community supply

Secondly, the buyer is responsible for making the appropriate intra-community purchase in Ireland.

January and February 2016 VAT 3 returns from an Irish trader.

What information on your ICAs must you submit to Revenue?

Your VAT 3 return must include information on all intra-Community acquisitions (ICAs). T1 (sales) boxes must charge VAT at the relevant Irish VAT rate.

Depending on whether the purchase is deductible for VAT reasons, you may be able to claim the VAT in the T2 (purchases) box.

The E2 (ICAs) box must include the purchase price of the purchased items.

Your annual Return of Trading Details (RTD) form must now include information on your ICAs.

When is VAT due on an ICA?

VAT is due on:

invoice or, if none is issued, on the 15th day following acquisition of the month following the invoice.
You must submit your VAT return for any period for which you were subject to VAT on or after that date.

The item’s selling price is used to calculate the VAT. For foreign-currency invoices, the rate of exchange in effect at the time the VAT is payable should be used.

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

All intra-Community acquisitions (ICAs) must be self-reported by VAT-registered enterprises and are not subject to a separate threshold.

However, if you’re concerned about:

exempt firms, as well as those whose suppliers fall outside of the purview of VAT
If the value of their ICAs of goods reaches or is projected to surpass €41,000 over the course of a year, they must be registered.

The following are just a few examples of the types of companies we’re talking about:

Financial institutions and non-profit organisations that provide health care are known as “insurers.”
VAT must be paid on ICAs by such organisations at the relevant rate. In most cases, such organisations are not allowed to deduct VAT, including VAT on ICAs.

Example
For its own use in January 2020, a French firm purchases items worth €5,000 from an insurance company that is otherwise exempt from VAT but is registered as an ICA.

The insurance firm reports a VAT of €1,150 (5,000 @23%) in its VAT Return. Insurers are not entitled to take credit for their work. Paying €1,150 to Revenue is mandatory for the insurance firm.

For January and February of 2020, the VAT 3 return
€1,150 for T1 (VAT on sales) and €1,150 for T2 (VAT on purchases)
No tax payable in T3 and €1,150 in T4 (VAT repayable)
E1 0 (value of goods sent to other EU countries)
E2 is 0 (value of goods received from other EU countries)
€5,000

What are VIES and Intrastat?

In the following scenarios, VAT-registered traders who engage in purchases of products or intra-Community supplies are required to submit extra reports:

VIES Intrastat system for exchanging VAT data.

VAT Information Exchange System (VIES)

Checks can be undertaken in each Member State on the legitimacy of zero-rating claims using the VIES process. Unreported movements of zero-rated items between Member States can be detected with its assistance.

VIES allows traders to verify their clients’ VAT registration numbers in different EU Member States. Customers can verify the validity of VAT numbers by using this feature. Only intra-EU trade is covered under the VIES system.

 

VAT-registered businesses are obligated to report their EU supply transactions on a periodic basis. More extensive information on your VIES reporting responsibilities can be found in the further guidelines.

Intrastat

Intrastat is used to monitor the transit of goods between EU members. On a broad basis, there is no correlation between who owns the commodities and how much EU commerce there is. There is nothing else to discuss.

Additional guidelines go into deeper detail about Intrastat.

Intra-Community acquisitions (ICAs) of alcohol products

Value-Added Tax (VAT) is paid at the same time as excise tax is paid in the State for intra-Community purchases of alcohol. The goods’ invoiced price is increased by the amount of excise tax due, and then VAT is applied.

What is the duty suspension arrangement?

VAT is not charged on the sale of alcohol goods when they are under a duty suspension arrangement, independent of the source (imports, EU ICAs or domestically produced).

For VAT reasons, the final delivery of alcohol goods made while duty suspension is in effect does not count as a supply. In addition to excise duty, VAT must be paid when a product is removed from duty suspension. If there has ever been an existing supply, it should be ignored.

It will not be charged on the VAT invoice submitted at the time of supply for this last supply. Instead, the owner will be responsible for paying it along with the excise duty when the products are removed from duty suspension.

When a duty suspension is in effect, the supply of alcoholic beverages is prohibited:

Providers shouldn’t be required to collect sales tax.
Invoices for the supply should not include VAT information.
The ICAs of alcoholic beverages are discussed in greater depth in additional guidelines.

Acquisitions of new means of transport from another Member State

Bringing a new vehicle into Ireland from another EU member state entails paying Irish Value-Added Tax (VAT). New modes of transportation include automobiles, boats, and planes. The following table provides the required information.

For VAT reasons, a new mode of transportation.
Specification “New” for automobiles
More than 48cc or more than 7.2kw
Six months old or less, or less than 6,000 kilometres driven
Ships of the sea
7.5 metres in length and less than 3 months old, or fewer than 100 hours of sailing experience
Aircraft
Take-off weight of more over 1,550 kg
less than three months old, or less than forty hours of flight time

When does VAT become payable on new means of transport?

New motor vehicles

It is necessary to pay Irish Value-Added Tax when importing a new automobile from another EU member state (VAT). Automobiles, boats, and planes are all new ways of mobility. The information needed is shown in the table below.

One another way to go around town, this time without paying sales tax.
Specification Automobiles are “new” to this generation.
more than 48cc, or 7.2 kW in power
Over 6k miles driven in the first six months
Sailors’ ships
Sailing experience of less than 100 hours, or 7.5 metres in length and less than three months old
Aircraft
Takeoff weight greater than 1,550 kg and fewer than three months of flight time

New vessels and aircraft

The local customs office must be paid the VAT on the purchase of a new vessel or aircraft by:

Members of the public.
VAT cannot be reclaimed by anyone else.
Within three days after arriving in the state, you must pay the state’s VAT.

Accountable Persons

Accountable individuals who are eligible to claim VAT on the purchase of a new mode of transportation must account for the VAT in their VAT return.