Value Added Tax

Updated on June 3, 2022

Introduction

In most cases, Value Added Tax (VAT) is a tax levied on the sale of goods or services and is usually included in the price of most items and services.

You may be charged VAT if you order or bring products into Ireland from outside the European Union (EU).

How VAT is charged

Consumers who purchase goods and services are subject to VAT, which is a tax imposed on their purchases. You don’t know how much VAT you’re paying because it’s integrated into the price of many everyday things, such as clothing and gasoline. However, you may see the VAT amount and rate on your bill if you purchase certain goods or services, such as energy or professional services.

Every time the price of an item rises, VAT is levied.

The current standard rate of VAT is 23%.

Example

An electronics manufacturer sells a television for €100 to a wholesaler, who then adds 23% VAT to the purchase price. Because of this, the distributor pays €123 for the TV. Once the VAT of €23 has been paid by the manufacturer, the government receives it.

The store buys the television for €200 from the wholesaler. Retailers will pay €246 for the product when he adds VAT at 23 percent. Since the distributor has already paid 23 percent of the tax back to the producer, that leaves 23 cents to be paid to the government.

VAT must be added to the retail price of a television when it is sold to a consumer by a retailer. With VAT at 23 percent and a selling price of €369 for the consumer, his television is available for purchase at €300. He must pay the government €23 but can claim back €46 from his wholesaler, which leaves the government with €23.

Consumers have paid €69 for the television, and the government has earned a 23-percent share of it. Retailers, distributors, and manufacturers only had to pay the VAT they passed on to the next level of purchasers in the chain of distribution.

VAT on imports

Only VAT for purchases made by individuals for their own use is addressed in this section.

You must pay VAT and import charge on any goods you bring into Ireland from outside the EU (EU). This includes anything ordered through the internet or through the mail. When purchasing equivalent goods in Ireland, you will be charged VAT at the same rate.

VAT is typically paid in the EU member state where the goods were purchased, although there are a few exceptions, which are detailed below.

If you buy online

From outside the EU

The VAT exemption for goods with a value of up to €22 imported from outside the EU will be eliminated on July 1, 2021. VAT is levied on all imported goods from countries outside of the European Union.

Import One Stop Shop (IOSS) registration enables some online retailers to add VAT in their product prices. Determine if the listed price includes taxes and duties before you buy something.

Anything exceeding €150 in value is subject to customs duty.

Alcohol and tobacco items are subject to excise duty, which is collected separately from customs duties.

Taxpayers who purchase items from outside the EU for personal use are provided with detailed instructions on how to calculate the tariffs and taxes they are responsible for owing.