VAT in Ireland

VAT in Ireland

Ireland or Republic of Ireland is a member state of the European Union and one of the countries with very attractive programs for non-resident companies. After Brexit it became one of the largest offshore financial centres and due to agreements following that event Ireland became a key node to the flow of goods into UK through the Northern Ireland. Ireland is also a high priority choice for entrepreneurs due to low effective tax rates with many services that were classified as tax-haven tools. There is no doubt that Ireland is a country of high interest to all entrepreneurs, and it would certainly be beneficial to become more familiar with some of the VAT regulations established there.

VAT number

Ireland is one of the EU countries and Northern Ireland is being treated like EU country to a certain degree due to agreements signed after Brexit. This is important because it allows to perform the VAT number validation check through VIES service. VAT numbers issued by Republic of Ireland can be recognized by their format, which is composed of country code IE and eight to nine characters with one or two of them being alphabetical characters. Irish VAT numbers may take one of the forms:

  • IE1X3456X
  • IE1234567X
  • IE1234567XX

VAT thresholds

In Republic of Ireland businesses and natural persons are obliged to register for VAT purposes, should their annual turnover with calculated taxable period based on calendar year exceed certain values.

  • Selling goods – 75,000 EUR
  • Supplying services – 37,500 EUR
  • In case of engaging in both goods and services, but with sale of goods exceeding 90% of the turnover – 75,000 EUR
  • Mail-orders and distance sales – 35,000 EUR
  • Acquisitions from the other EU countries – 41,000 EUR

Please keep in mind that value for acquiring goods and services from abroad is obligatory for natural persons, whether they are Irish residents or not, as VAT account becomes mandatory after threshold is exceeded for the purpose of receiving goods and services – main business activities of an individual, if their threshold has not yet been exceeded, may remain unregistered for VAT.

VAT registration

Crossing the threshold may be a reason for registration, but there is also an option for doing so voluntarily or being obliged to do so due to character of done activities. Non-residents are required to undergo VAT registration process should their activities involve:

  • Distance selling from Ireland
  • Transport of goods from Ireland
  • Providing IT services from Ireland
  • Real estate transactions regarding properties within Ireland
  • Importing goods in Ireland
  • Supplying services in Ireland

In Republic of Ireland designating fiscal representation is not required but certainly possible. It is a certain way to simplify all the procedures involving VAT and reduce the burden by finding an expert to solve the issues instead.

In case of being a sole trader having your VAT registered involves completing TR1 registration form, while corporate entities require TR2 registration form. This can be done through the Revenues Online Services website, which is available in both English and Irish languages. For foreign businesses Irish revenue commissioners prepared variant forms TR1(FT) and TR2(FT). Please keep in mind that the FT variants are to be submitted in paper form, meanwhile in case of residents unless exceptional circumstances arise you are expected to do so in online form, with documents in paper form being returned along with request to submit application online.

VAT – deadlines and rates

Republic of Ireland is part of EU VAT area and follows the regulations of the EU on VAT, which along with many privileges also brings some responsibilities such as EC sales list (ECSL). EU regulations also involve VAT rates, although it only limits the lowest values for rates it did establish a certain standard to be kept within EU VAT area with some exceptions such as Canary Islands, where VAT is replaced by a different tax. Within Ireland there are few options regarding VAT return, with bi-monthly being the standard, while four-monthly, six-monthly and annual returns are possible upon being authorized by Collector-General. For that to happen, there are additional circumstances that must occur:

  • Annual return – equal instalments by direct debit
  • Sit-monthly returns – annual liability equal or less than 3,000 EUR
  • Four-monthly returns – annual liability within the range from 3,001 EUR to 14,400 EUR

In Ireland as of 2022 the VAT rates are:

  • Standard rate – 23%
  • First reduced rate – 13.5%, applied to coal, oil, properties, car leasing, cleaning and maintenance, etc.
  • Second reduced rate – 9%, applied to printed materials and entertainment services such as museums, cinemas, etc.
  • Livestock rate – 4.8%, applied to agricultural matters such as livestock, horse renting and greyhounds supply
  • 0%, applied to exports, disability aids, oral medicine, fertilisers, large animal feed, etc.
  • VAT exempt, applied to educational, financial and medical services, live performances (musical and theatrical) without meals provided during performance.

It is highly recommended to periodically check the applicable VAT rates, as they are subject to change. There are several changes announced to take place starting from 2023 and it is to be expected that there are more to follow.

Assistance

Ireland is an extremely enticing target for an entrepreneur or an individual striving to become one. With numerous ways to increase the profit margin through understanding of the tax regulations comes a price, a sacrifice of time and effort required to become familiar with laws and avoid mistakes that might prove to be far more costly than one is prepared for. Due to such circumstances, there is no doubt that making use of services of an expert is an advisable course of action – one that is bound to greatly decrease the risk involved and make the process of dealing with formalities vastly smoother. There are numerous accounting offices and tax-law firms willing to offer their services to anyone seeking their services.