VAT System

The Republic of Ireland VAT system will remain broadly similar to that now applicable in the United Kingdom. VAT is an EU wide tax in the sense that the rules derive from EU directives which set out common basic principles so that the VAT system of each EU state is alligned with those  of the others. Although the UK will retain a system of VAT immediately after Brexit, in the absence of an  agreement providing otherwise, the same interlocking facilitation will not arise in trade with EU states.

EU VAT law treats transactions with other EU states differently to those with states outside the EU, so-called third countries. See the various pages on this website dealing with the scenarios that arise in the Republic of Ireland context, as to respectively the import and export of goods and services into and out of the another EU state or a non-EU state.

In broad terms, the system of VAT in the Republic of Ireland is very similar to that in the United Kingdom. The registration thresholds are lower. The general VAT rate is 23%. There is a lower rate of 13.5%. A 9% rate applies in a certain few sectors. As in the UK, some socially desirable services have a zero rate, which is very beneficial. Other businesses are exempt from VAT, which means they cannot reclaim VAT on their purchases.

Administration of VAT

Businesses with turnovers less than the threshold may choose to elect to register for VAT. Businesses below the annual turnover threshold and private persons must effectively pay VAT on their purchases. Businesses above the thresholds must register for VAT and charge VAT on their sales. To the extent that their purchases are for the purpose of sales which are subject to VAT (at whatever rate), businesses are entitled to reclaim that VAT.

In the case of the sale of goods or supply of services within Ireland, an Irish based company must collect and account for VAT at the appropriate rate. As in the UK, returns are made accounting for and paying any net VAT on sales less VAT on purchases for the purpose of those sales.

VAT returns are usually made every two months. The return must be made by the middle of the month following the two-month period. An extension to the 23rd of the following month is permitted for online returns. Online returns are mandatory in nearly all circumstances. so that (for example) VAT due for the January and February period must be accounted for in an online return paid by 23rd March following/