Ireland: VAT Updates

Standard VAT rate

On 1 September 2020, the standard rate of VAT was temporarily reduced (until 28 February 2021) from 23% to 21%. Any VAT credit note issued to a VAT registered person, which contains a VAT adjustment relating to a supply of goods or services, should show VAT at the rate in force at the time the original invoice was issued.

Filing extension for the 2020 Annual Return of Trading Details (ARTD)

Revenue has extended the filing date for the 2020 ARTD to 10 March 2021. The ARTD is currently being updated to reflect the temporary change in the standard VAT rate from 23% to 21% and should be available for filing as of 10 February 2021.

Postponed Accounting

Overview

Ireland has introduced a new mechanism to alleviate the VAT cash flow burden resulting from importation. Known as “Postponed Accounting”, the mechanism is available to all accountable persons in Ireland who purchase goods from outside the EU VAT area.

Postponed Accounting enables an accountable person to self-account for VAT on imports via the VAT return, so that import VAT may, subject to the usual rules of deductibility, be reclaimed at the same time as it is declared on the VAT return. This will be a straightforward self-accounting transaction, without the need to pay the VAT at the point of importation. The VAT return has been amended to include an additional field/box PA1 to capture the value of goods imported under Postponed Accounting.

Who can make use of the new mechanism?

Accountable persons who are registered for VAT and Customs & Excise (C&E) at 11:00 pm on 31 December 2020 will be given automatic entitlement to Postponed Accounting.

VAT registered traders who are not registered for C&E at 11:00 pm on 31 December 2020 who wish to import goods into Ireland from that point in time must register for C&E. Once registered for C&E, they will be given automatic entitlement to Postponed Accounting.

In order to make use of Postponed Accounting, an accountable person must be in compliance with certain conditions and requirements.

Buying goods from outside the EU for personal use

As of 1 July 2021, all non-EU imports, regardless of value, will have Irish VAT applied and collected, whereas currently, there is a de minimus value exemption of €22 applied in assessing liability to VAT. This change will, in effect, increase the cost of purchase for Irish-based customers which may have an impact on sales into Ireland by non-EU based businesses.

Read the WTS Global VAT Newsletter here