Value Added Tax

Updated on May 21, 2022

Introduction

VAT is a tax levied on the sale of goods and services that is normally included in the price of most goods and services.

You may be taxed VAT when products arrive in Ireland if you order or bring them in from outside the European Union (EU).

How VAT is charged

VAT is a tax on consumer spending, and it is imposed on everyone who purchases goods and services. You don’t see how much VAT you’re paying because it’s integrated into the price of many everyday things like clothing and gasoline. When purchasing certain goods or services, such as energy or professional services, the amount of VAT and the rate at which you are charged may appear on your statement.

VAT is charged at every point in the sales process where the price of an item rises.

The current standard rate of VAT is 23%.

Example

A manufacturer sells a television to a wholesaler for €100 and adds 23 percent VAT to the price. As a result, the wholesaler pays €123 for the TV. The manufacturer then pays the government €23 in VAT.

The television is then sold to a store for €200 by the wholesaler. He adds 23 percent VAT, bringing the total to €246 for the store. The distributor must pay €46 in VAT to the government, but he can recover the €23 in VAT he has paid to the manufacturer, leaving €23 to pay to the government.

When a shop sells a television to a consumer, he must include VAT in the selling price. He sells the television for €300, plus a 23 percent VAT, for a total of €369 to the consumer. The retailer must pay the government VAT, but he can take back the €46 VAT he paid to the wholesaler, leaving the government with €23.

The government has now earned 23 percent of the consumer’s television purchase price (€69). Only the amount of VAT charged to the next group down the line was paid by the retailer, wholesaler, and manufacturer.

VAT on imports

This section only addresses VAT for individuals purchasing things for personal use.

In general, all items brought into Ireland from outside the European Union must be subject to VAT and import charge (EU). This includes both online and mail-order purchases. You will be charged VAT at the same rate as in Ireland for comparable goods.

VAT is normally paid in the EU member state where the goods were purchased, although there are certain exceptions – see below.

If you buy online

From outside the EU

The VAT exemption on items from outside the EU with a value of up to €22 will end on July 1, 2021. VAT is charged on all items imported into Ireland from non-EU countries.

Some online shops are registered with the Import One Stop Shop (IOSS), allowing VAT to be included in the price of the items. Check whether the listed price includes tax and duty expenses before making a purchase.

Goods worth more than €150 are subject to customs duty.

Alcohol and tobacco goods are subject to excise duty, which is different from customs duty.

Revenue has a guide to purchasing products from outside the EU for personal use, which includes instructions on how to figure out how much duty and VAT you owe.

From another EU Member State

If you buy items from another EU member state online or by mail, you may be charged VAT at the Irish rate. If the seller from whom you are purchasing goods has not exceeded the Distance Sales Threshold in Ireland, you will be charged VAT at the rate in effect in the country of purchase. At checkout, you’ll normally be advised how much VAT you’ll have to pay.

Excisable products (such as alcohol, tobacco, and oil) acquired through the internet or by mail within the EU are liable to excise duty and VAT.

Travelling with your purchases

From outside the EU

If the value of your items (other than tobacco and alcohol products) purchased and brought into Ireland from a non-EU country does not exceed:

If you are over the age of 15, you must pay €430; if you are under the age of 15, you must pay €215 in VAT and customs charge.

If you bring in an item that costs more than €430 or €215, you must pay import duties on the entire amount. If you are arriving in Ireland from a country outside the EU, Revenue has information on you.

From another EU Member State

When travelling between EU nations, there are no restrictions on what you can buy and take with you as long as the items are for your own personal use and not for resale.

In the EU member state, VAT is included in the product price, and no additional taxes, including VAT, can be levied here in Ireland. The only exemption is when importing a vehicle from the European Union.

Excise duty-paying commodities, such as alcohol and tobacco products, are subject to special laws. If you are coming to Ireland from the EU, Revenue has issued information.

Gifts from outside the EU

You can receive a gift worth up to €45 from outside the EU without paying import taxes. However, the donation must be declared accurately. Revenue’s guide on relief available for imports from non-EU countries has more information.

VAT on residential property

If you:

If you purchase a new home from a builder or developer, you will be charged 13.5 percent VAT.
You do not have to pay VAT if you buy or sell a “old” or existing property.
If you buy a house site from a landowner, you don’t have to pay VAT unless you have a development agreement with both the landowner and a builder.
You cannot impose VAT on rent from a residential property if you are a landlord.

You only have to pay stamp duty on the base price of the house – before the VAT was added – if you paid VAT on it (because you acquired it from a developer or builder). So, if you paid €227,000 (with VAT) for your new home, you only pay stamp duty on the €200,000 base price.

Rates

Different items and services are subject to different rates of VAT. Revenue contains information on the various VAT rates in effect. The following are some examples.

VAT is charged at a regular rate of 23%. This rate applies to all items and services that do not fall under the reduced rate categories. Alcohol, audio-visual equipment, car parts and accessories, CDs, computers, consultancy services, cosmetics, detergents, diesel, fridges, furniture and furnishings, hardware, jewellery, lawnmowers, machinery, non-oral medicines, office equipment, pet food, petrol, paper, tobacco, toys, tools, washing machines, and bottled water are among them.

Fuel (coal, heating oil, gas), electricity, vet fees, building and building services, agricultural contracting services, short-term automobile rental, cleaning and maintenance services all have a lower rate of VAT of 13.5 percent.

Newspapers and athletic facilities pay a special discounted rate of 9%. This includes e-books and newspapers delivered electronically. From 1 November 2020 to 31 December 2021, the VAT rate for the hospitality and tourism sector was reduced from 13.5 percent to 9%. Budget 2022 stated that this would be extended until the end of August 2022. This includes entrance to cinemas, theatres, museums, fairgrounds, and amusement parks, among other entertainment services. Hairdressing and certain printed products such as brochures, maps, and programmes are also subject to the 9% VAT.

A special lower rate of VAT for agriculture is 4.8 percent. It covers animals (excluding chickens), greyhounds, and horse rentals.

All exports, tea, coffee, milk, bread, books, children’s clothing and shoes, oral medicine for humans and animals, vegetable seeds and fruit trees, fertilisers, large animal feed, and disability equipment such as wheelchairs, crutches, and hearing aids are all subject to a 0% (Zero) VAT rating.

Exempt from VAT

VAT is not charged on financial, medical, or educational services. Live theatrical and musical acts may also be exempt from VAT (except those where food or drink is served during all or part of the performance).

Difference between exemption and zero-rating

If a company sells taxable products or services, including zero-rated ones, it can reclaim VAT on taxable business purchases from the government. However, someone who simply provides exempt products or services cannot claim VAT.

Claiming back VAT

VAT non-registered individuals
VAT can be claimed back in certain instances. Certain equipment and appliances are eligible for a VAT refund for people with impairments.

People registered for VAT

To meet the government’s tax duties, a firm must register for VAT. A business that registers for VAT can also claim VAT back on purchases.

Where to apply

Detailed contact information is available on Revenue’s website.