VAT in Ireland is chargeable on the supply of goods and services within the State in the course or any business, and on goods imported into the State from outside the EU. Want more details? Read on!
VAT in Ireland is a tax on consumer spending, therefore everyone who pays for goods and services pays VAT. It is typically included in the sale price of said goods/services, however with some things like computers, electricity, and professional services the VAT will be shown separately on your bill.
How is VAT charged
VAT in Ireland is collected at every stage of sale by each body in the chain of supply. Manufacturers, wholesalers, and retailers all act as VAT collectors. They collect VAT from the customer and send the excess funds to Revenue. Manufacturers, wholesalers and retailers charge VAT down the supply chain, and as each body charges another VAT, they are able to reclaim the VAT they paid to the government. VAT is charged at different rates depending on the goods and services purchased, but the standard rate of VAT in Ireland is 23%. For a more detailed list of VAT rates in Ireland, click here.
VAT on goods
Goods for VAT purposes means all movable and immovable objects both new and used. The term ‘goods’ also includes electricity, gas, and any form of power, heat, refrigeration, and ventilation. The rate of VAT on the goods you purchase is dependent upon the type of product. For example, most ‘movable’ goods will be liable for VAT at a rate of 23%, whereas things like fuels, electricity, and gas are taxed at a lower rate of 13.5%. For more information on the categories of goods and their VAT rates, click here.
VAT on services
For VAT purposes, a service constitutes any commercial activity other than the supply of goods. These services typically include:
- Refraining from doing something
- Granting and surrendering a right
- Service of caterers, mechanics, plumbers, accountants, solicitors, consultants, etc.
- The hiring (other than hire-purchase) or leasing of goods
- Electronically supplied services (digitised goods delivered online)
- The handing back (after processing) of movable goods made up of materials supplied by a customer
Goods supplied in the provision of a service, i.e., car parts ordered by a mechanic repairing your car, are liable for VAT based on the two-thirds rule. This rule means that if the cost of the goods used in completing a service exceeds two-thirds of the total price, the rate which applies to the goods then applies to the total transaction including services rendered. There are certain exemptions to this rule, more information of which you can find here.
VAT on imports
Generally, as a private individual you are required to pay VAT and import duties on any goods brought into Ireland from outside the EU. This includes items bought online and received via mail. VAT on imported goods is charged at the same rate as similar items sold in Ireland. Within the EU, VAT is typically paid to the country in which you purchased said goods. However, if the supplier you are buying goods from has remained within the Distance Sales Threshold in Ireland, you will pay VAT at the appropriate rate to that product in the EU country of purchase.
You can buy goods online VAT-free from outside the EU if they are valued at €22 or less. Products bought online valued up to €150 may be imported without paying customs duty however you will still pay VAT. This excludes products like tobacco, alcohol, and perfume all of which are charged VAT and customs duty regardless of purchase price or value.
If you buy goods online from outside the EU and they are €22 or more, you must pay VAT. Likewise, if the goods you purchase online are €150 or more you will have to pay VAT and customs duty. These will be collected by the company that delivers your items.
VAT on residential property
VAT is chargeable on residential properties where you are purchasing a property from the builder or developer. The stamp duty of the property you buy will be calculated from the price of the property before VAT is added. The following rules apply to residential property VAT in Ireland:
- If you are buying a new house from a builder/developer VAT will be charged at 13.5%
- If you are buying or selling an existing property you typically do not have to pay VAT
- If you are a landlord, you cannot charge VAT on rent from a residential property
- If you buy land for a house from a landowner, you do not have to pay VAT unless you have an agreement with both the landowner and a builder to develop the property
Some properties may be exempt from VAT in Ireland. For more information, click here.
Exemptions from VAT
You do not have to pay VAT on financial, medical, or educational services. As well, you may not have to pay VAT for live theatrical and/or musical performances unless food or drink is served during part or all of the performance.
There is a difference between being exempt from VAT and having a VAT rate of 0%. If a business supplies goods/services including those with a rate of 0% they can claim back VAT from the government on table business purchases. If, however, the business in question only supplies exempt goods/services, they cannot reclaim VAT.
In some cases, people not registered for VAT can claim back VAT from the government. For example, persons with disabilities can claim a VAT refund on certain aids and appliances they need to combat difficulties. More information on reclaiming VAT as a person with a disability can be found here.
A business person on the other hand, must be registered for VAT to fulfill tax obligations. Registering for VAT allows the business to reclaim VAT on purchases to avoid overpayment of tax.
There you go guys, all the essential information on VAT! Notice something we left out? Comment it below!
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