Value-Added Tax (VAT)

Updated on April 13, 2022

VAT registration, calculation, payment, and reclaim, VAT rates, and VAT on property restrictions are all covered.

Overview

VAT is a tax levied by EU member states on the sale of goods and services within their borders. The final buyer of the commodity or service is the one who must pay the tax in all situations. Manufacturers, wholesalers and retailers are all VAT collectors in the supply chain.

When a company receives VAT from a customer, it must report that VAT to Revenue. The VAT collected can be reclaimed from their suppliers when they return the VAT collected.

The State’s territorial sea is included in the State’s territory for VAT purposes. Twelve nautical miles is the boundary of the State’s territorial sea.

In this part, you’ll learn about:

Exemption from VAT reverse charge (self-accounting) qualified activities VAT and fraud are taxable and accountable persons.

Who are taxable and accountable persons?

Who is a taxable person?

The term “taxable person” refers to someone who runs a business on their own in the European Union (EU) or elsewhere and is therefore subject to taxation. Flat-rate (unregistered) farmers and those who are exempt from VAT are included.

Who is an accountable person?

A taxable person (for example, an individual, partnership, or firm) who is:

is obliged to register for VAT if they provide taxable products or services in the state.
As a result, they must collect sales tax from customers in the state.

Exemption from VAT

A taxable person generally only provides exempt services (goods or services).

A taxable person is not required to register for VAT if they are engaged in such exempt activities.

If a trader of exempt supplies purchases goods or services from within the EU or outside, they may be compelled to register and account for VAT.

The same goes for a taxable person who also sells taxable products or services and is therefore needed to register for the VAT regime.

VAT registration, on the other hand, has to do with the taxable supplies you make.

To be eligible for a VAT refund, you must be engaged in both exempt and taxable activity.

Section on property and construction VAT provides more information on specific arrangements for property owners.

What is reverse charge (self-accounting)?

In most cases, the supplier of the products or services is responsible for collecting and accounting for Value-Added Tax (VAT). However, in some situations, the recipient is required to answer for the VAT due rather than the supplier.

This is applicable to the following:

receipt of cultural, artistic, or entertainment services from persons not established in the State repair, valuation, or contract work carried out on movable goods in another State for designated persons in the State by a supplier who is not established
the receipt of greenhouse gas emission allowances from another taxable person established in the State or abroad by certain categories of persons in the State through the natural gas distribution system For further in-depth information, please refer to the following links.
vesting order to NAMA a taxable person who is engaged in the business of trading in scrap metal or the delivery of building work in the state between two linked persons

What are qualifying activities?

It is possible to claim back VAT on expenses related to the sale of goods or services.

Additionally, you can claim VAT back on expenses related to specific listed activities, even if those activities are not taxed. ‘Qualifying activities’ are what you’d call those actions.

The following are examples of activities that can be used as proof:

supply items to travellers and their baggage that are regarded to have taken place in another Member State under distance sales rules. If the provider is VAT-registered in the other Member State, this is permitted.
The issue of new stocks, new shares, new debentures, and other new securities in order to raise capital for an accountable person’s taxable supplies of goods or services outside the State that would be taxable supplies if made in the State are examples of financial and insurance services provided outside the EU.

VAT fraud

Becoming entangled in a series of transactions linked to VAT fraud has repercussions. Even if the transactions you are engaging in are not illegal, this rule nevertheless applies to you.

Revenue will impose penalties if necessary, and you have the option to:

lose the ability to claim back VAT
where deception is involved, you may be liable for Irish VAT on previously zero-rated intra-Community supplies.
Detailed instructions for preventing VAT fraud can be found in additional guidelines.