EU VAT guide – Ireland

VAT rates in Ireland 

How much is VAT in Ireland? 

The Standard VAT Rate (Value Added Tax (VAT)) in Ireland is 23%. 

Some supplies are exempt from VAT. This applies to business activities like health care, insurance, and some educational services.

The exact list of taxable transactions and allocated Ireland VAT rate can be found in VAT Ireland regulations. 

VAT thresholds in Ireland 

Valuable information about the VAT threshold in Ireland and applicable provisions can be found in the VAT legislation. Also, a helpful source of information is an interpretation of the appropriate information shared by Tax Authority officials. 

VAT registration threshold for resident businesses: The resident businesses can benefit from different thresholds, depending on the type of supply they make in the State.

• For businesses that make exclusively the supply of services, there is a threshold of EUR 40,000. 
• The taxable persons that make exclusively supply of goods can benefit from the threshold of EUR 80,000

VAT registration threshold for non-resident businesses: In most cases, there is no registration threshold for foreign businesses without a permanent establishment in the country. 

VAT registration threshold for intra-EU distance sales of goods and B2C supplies of services: EU-wide harmonized threshold of EUR 10,000.

VAT registration threshold for non-EU established suppliers of Electronically Supplied Services: No registration threshold.

VAT Taxable Activities in Ireland

A taxable person by Ireland VAT Law is a legal person or individual who carries out economic activity independently, whatever the purpose or results. 

Types of taxable activities that trigger the imposition of Ireland VAT: 

• The supply of goods and rendering of services in Ireland for consideration;
• Receipt of reverse-charge services by a taxable person in Ireland;
• Export of goods;
• Import of goods.

Other case scenarios exist where domestic or foreign businesses should impose Ireland VAT on their transactions. 

Tax Representative in Ireland 

For non-EU-established businesses, having a tax representative for all VAT compliance-related activities is often mandatory. Tax persons with tax residence in third countries or territories with mutual assistance agreements signed with Ireland can fulfill their tax obligations without the requirement to contract a tax representative. 

For EU-established companies, having a tax intermediary isn’t compulsory. Still, the economic operator could acquire the professional to ease up and streamline compliance challenges for its operations in the country. 

VAT on Electronically Supplied Services in Ireland 

Electronically Supplied Services 

Electronically Supplied Services, as defined by the EU VAT Directive 2006/112/EC, represent a type of service that is delivered by the internet or a similar type of digital network. A fundamental characteristic of ESS is their inseparable reliance on automation; meaning that other types of services that require an important level of human intervention for their delivery cannot be classified as the ESS. 

Services not delivered digitally are excluded from this category. Ireland has implemented the concept of Electronically Supplied Service into its national legislation, harmonizing in that way the domestic rules with the EU VAT Directive and accompanying implementing regulations.  

This coherence simplifies the taxability rules for ESS, making things easier for economic operators and responsible tax authorities. This step reflects Ireland’s commitment to simplifying and aligning its tax framework with EU norms.

However, despite this clarification, the terms “digital services,” “digital products,” and “electronic services” are frequently used equally. This approach can cause concern for different parties involved in the transaction regarding how to approach different types of digital products or services from the taxability perspective. 

Taxability Rules for ESS

The adoption of the E-Commerce VAT package on July 1, 2021, introduced many relevant changes to the EU VAT framework. The scope of changes is pretty extensive, it goes from the introduction of the new reporting scheme, new taxability rules, and the uniform approach by regulators can be summarized in the idea of strengthening the single market with more tax and legal certainty. 

These reforms specifically improve the business environment for VAT registration, tax reporting, and other VAT compliance challenges.

Relevant highlights of the 2021 E-commerce Reform:

• B2B Electronically Supplied Services: For B2B transactions existing general rules for determining the place of supply are used. This alignment with the existing framework simplifies the operational procedure for defining what tax rules should be followed for the concrete transaction.  This ensures more clarity for economic operators under this type of business relationship. 
• B2C Electronically Supplied Services: For businesses that have a place of business based outside the EU, the destination principle applies, meaning the place of supply for tax purposes is determined by the customer’s location. This principle aids in clarifying tax responsibilities when selling to EU consumers.
• Distance Sales of Goods and ESS: For EU-based suppliers, reaching an annual turnover threshold of EUR 10,000 is very important. Taxable persons who make turnover below this annual threshold may opt to follow their home country’s VAT rules or report transactions through the One-Stop Shop (OSS) schemes.
• Distance Sales Exceeding the EUR 10,000 Threshold: Merchants established in the EU whose annual turnover exceeds this threshold should apply VAT rates based on the destination principle. 

This alignment of VAT rules, established by the EU VAT Directive, simplifies compliance for companies operating across the EU. 

How much is VAT in Ireland for Electronically Supplied Services?

VAT rate Ireland: A standard VAT rate of 23% is applied in most cases on sales of Electronically Supplied Services in Ireland

E-Commerce VAT Rules in Ireland 

On July 1, 2021, the EU regulators orchestrated a massive revision of the EU VAT Directive, with a main emphasis on the E-commerce section. The focus of these changes is to address the expanding impact of the digital economy and is designed to simplify the increasingly complex and costly administrative processes for businesses operating cross-border.

Mention-wide changes to the EU VAT Directive concerning E-commerce VAT rules: 

• Cross-Border Sales of Low-Value Goods: The reforms have established a uniform EU threshold for the import of low-value goods from third countries or third territories. Thanks. to the newly established reporting system businesses can fulfill their reporting requirements with more clarity and less stress;
• Intra-Community Distance Sales: The previous national thresholds for intra-community distance sales have been removed, simplifying VAT obligations for non-resident sellers and reducing compliance complexity;
• Domestic Sales by Deemed Suppliers: In certain scenarios, digital platform operators become the responsible party for charging, collecting, and reporting VAT to tax authorities. When the conditions are met, the VAT duty of the original vendor is transferred to the digital platform operator;
• Provision of B2C Electronically Supplied Services (ESS): The scope of services that qualify for reporting under the One-Stop Shop (OSS) schemes has been significantly broadened, facilitating easier VAT reporting for businesses engaged in cross-border activities. Revision of the OSS schemes permits the impacted economic operators fewer difficulties in handling their VAT compliance duties within the EU. 

Improvements for uniform reporting systems:

Alongside the revision of the taxability rules for different types of B2C transactions, the latest EU VAT reform from 2021, introduced, above mentioned changes concerning simplified reporting systems.

These include the presentation of the new One-Stop Shop (OSS) scheme, the Import-One-Stop Shop (IOSS), and the expansion of the scope of the two previously established schemes. These initiatives aim to streamline VAT reporting and compliance across the EU, making the related tax and legal challenges less costly and confusing for the impacted parties.

The E-Commerce VAT package made the following special schemes available:

• Union One-Stop-Shop Scheme;

• Non-Union One-Stop-Scheme;

• Import One-Stop-Shop Scheme.

Overview of EU VAT Special Schemes

Conditions to be met for the usage of the Non-Union OSS:

This scheme can be used only by taxable persons who have a place of business outside the EU. This simplified reporting mechanism permits non-EU merchants to aggregate their B2C cross-border deliveries of various types of services, under one declaration and file it in their Member State of Identification. 

The value of this simplified scheme is significant, it paves the way for merchants to decrease their yearly budget for VAT compliance challenges across the Single Market. 

Conditions to be met for the usage of the Union OSS:

Taxable persons that have their establishment in some of the Member States can use the Union OSS scheme to report their intra-community distance sales of goods and cross-border B2C services. This simplified reporting method elevates the quality and efficiency of their compliance duties.

The economic operators that don’t have a permanent establishment within one or more Member States, can profit from this simplified scheme for reporting all of their intra-community distance sales of goods, to customers based within the community.

Conditions to be met for the usage of the Import One-Stop-Shop Scheme:

The Import One Stop Shop (IOSS) is open to both EU and non-EU businesses. This scheme is used for reporting the VAT charged for imports of low-value goods from third countries or third territories.  Digital platforms that intervene in the facilitation of the sale of low-value goods bear the tax responsibility instead of online vendors.

These schemes are part of the EU’s effort to reduce the administrative burden on responsible taxpayers while safeguarding the established compliance systems. By providing these options, the EU aims to support the growth of international trade and digital commerce.

OSS Return and Payment 

Ireland hasn’t developed a simplified reporting system for non-resident providers of digital services. However, it has harmonized its national VAT regulation regarding the simplified reporting systems established by the EU VAT Directive, i.e., OSS schemes. 

Taxable operators from outside the EU as well as those from the EU can benefit greatly from accessing one or more of the OSS schemes. These schemes help them bypass the requirement for local VAT registration by using a consolidated reporting framework.

The adoption of the OSS schemes under the EU VAT Directive, and later on its implementation into national framework has drastically reduced the number of mandatory VAT registration and related compliance challenges for foreign providers of digital services and intra-Community distance sales of goods. 

However, the scope of these schemes does not guarantee a complete exemption to non-resident suppliers when dealing with taxable supplies to customers in Ireland. There are still many cases when foreign taxable persons should pursue the local tax registration procedure. 

Electronic Platform and Deemed Supplier Rules 

Ireland has adopted into its national framework the concepts introduced by the E-commerce VAT package in July 2021. These revisions of national rules have significantly lowered compliance and administrative expenses for non-resident companies that supply taxable goods and services to Ireland customers.

The new rules have introduced the concept of deemed supplier for digital platform operators. From the practical standpoint, it means that the VAT duties will be shifted from the original vendor to the platform operator. The transfer of VAT responsibilities happens in the following cases:

• When low-value goods that are imported from outside the EU are sold by merchants to end customers, and;
• When goods that are already within the EU are sold by vendors with a tax residency outside the EU to customers based in different Member States, no matter what their value. The supply needs to be managed by the platform. 

When certain conditions are met, the institute of deemed suppliers is triggered. Practically it means that the tax liability of the original vendor, the one that makes the supply in question, is transferred to the digital platform operator. In this case, the marketplace becomes responsible for fulfilling the VAT duties that would typically be managed by the original merchant.

This framework is comprised of two separate transactions:

• Business-to-Business (B2B): The initial transaction from the original vendor to the digital marketplace is defined as VAT exempted or zero-rated B2B transaction;
• Business-to-Consumer (B2C): The subsequent transaction from the marketplace to the end consumer is categorized as a B2C transaction.

This rule simplifies the reporting processes for both online vendors and digital platforms. For tax authorities, this transfer of tax liability also brings fewer challenges when the reports should be received, analyzed, or audited if the case shows the necessity for it. 

Invoice Requirements in Ireland 

General invoice information:

• Date of invoice issuance;
• Date of the supply of goods or provision of services if different from the date of the invoice issuance;
• Unique invoice numbers issued in sequence.

Seller information:

• Company name;
• Full address(head office);
• Billing address if different from company address;
•  VAT number.

Customer information:

• Name;
• Full address;
• VAT number;
• Delivery address;
• The billing address is different from the delivery address.

Fiscal Information:

• Description and breakdown of the goods or services – quantity, discounts, unit price excl. VAT;
• Total without VAT;
• VAT amount;
• The VAT rate(s) applied and the breakdown of VAT per rate;
• Invoice Total.

Additional information required in particular cases:

• Exemption reference – guaranteed by precise norm;
• Reverse charge – term if applicable;
• Self-billing – term if applicable;
• Tax Representative information for non-resident business.

Foreign Currency Invoice in Ireland  

In Ireland, it’s permissible to issue tax invoices in foreign currencies, but the VAT amount on the invoice must be shown in EUR.

VAT Return in Ireland 

Domestic returns

Domestic taxpayers and non-established foreign businesses who conduct business under the national VAT Ireland rules in general submit declarations:

1. Bi-Monthly;
2. Quarterly;
3. Semi-Annual.

Penalties for late reporting and omitted declarations 

Taxpayers should charge Ireland VAT on their transactions when the responsibility rises and submit the VAT return. If they do the return fillings after the deadline, they can expect to allocate more funds than they would if they had filled the return within the permitted time frame. 

In the case, a legal person makes a late payment, late registration, or erroneous declaration the following range of penalties could be expected:

• The taxable person that hasn’t registered for VAT – a fixed penalty of EUR 4,000;
• Failure to charge the VAT and pay VAT over to Revenue – a fixed penalty of EUR 4,000;
• Failure to comply with invoicing requirements – a fixed penalty of EUR 4,000;
• Failure to submit a quarterly VIES return –  a fixed penalty of EUR 4,000;
• Submission of erroneous return – a fixed penalty of EUR 4,000.

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