Comprehensive Guide to VAT in Ireland – Rates, Registration & Reporting

VAT in Ireland - Three Types of Rates

There are three types of VAT rates in Ireland:

1. Standard VAT rate,

2. Reduced VAT rates, and

3. Zero VAT rate.

In addition to these VAT rates, Ireland has one additional type of VAT rate, the Livestock rate, which is 4.8%.

How Much is VAT in Ireland’s Regions?

No special VAT rates are defined for any of Ireland’s regions. The VAT rates previously presented apply across the whole territory of Ireland.

VAT Registration Threshold

Besides the VAT regulatory framework, other sources that provide valuable information on VAT registration and VAT threshold in Ireland are websites of government agencies competent in VAT and taxes. Additionally, guidelines, official comments, and other publications by the Revenue, Iris tax, and customs agency contain all the clarification and interpretation of the relevant legislation.

Irish VAT legislation contains several VAT registration thresholds. The EUR 40,000 threshold applies to taxable persons who only supply services and those who make supplies of goods that fall within the scope of reduced or standard VAT rates but are produced from zero-rated materials.

Taxable persons engaged only in the supply of goods fall under the scope of the EUR 80,000 threshold. Finally, the VAT registration threshold for taxable persons acquiring from other EU Member States is EUR 41,000.

The EU-wide EUR 10,000 threshold for intra-EU distance sales of goods and B2C service supply is implemented in the Irish VAT framework. Also, based on EU rules, there is no threshold for suppliers of electronically supplied services established outside the EU.

Types of Taxable Activities in Ireland

In Ireland, a taxable person is a legal entity or natural person who independently carries out economic activity, including those exempt from VAT and flat-rate farmers.

Suppose those taxable persons, as part of their economic activity, supply goods and provide services for a fee, receive reverse-charge services, or export or import goods. In that case, they are involved in so-called taxable activities.

VAT Registration Process

The VAT registration process differs for domestic and foreign taxable persons, such as businesses. Depending on the applicant, an online or on-paper procedure is due.

Ireland VAT Registration for Domestic Businesses

Domestic businesses can register for VAT in Ireland independently or using a tax agent. In any case, the businesses or their tax agent can complete the VAT registration procedure online through a government portal, Revenue Online Service (ROS).

To complete the registration process, trusts and partnerships, as well as individuals and sole traders, submit the TR1 form.  Limited companies, on the other hand, submit a TR2 registration form. 

If the forms are submitted on paper when the online form is required, the application is returned to taxable persons or their tax agents with an accompanying request to complete an online form.

Ireland VAT Registration for Foreign Businesses 

Foreign businesses established in other EU Member states are not required to appoint a tax agent for all VAT-related matters, including registering for Ireland VAT. However, appointing a tax agent is mandatory if businesses are established in a non-EU country.

Unlike domestic businesses, which are mainly required to submit an online application, foreign taxable persons submit a paper version of TR1(FT) or TR2(FT) registration forms to the Office of The Revenue Commissioners in Wexford, Ireland.

VAT Returns in Ireland

Ireland VAT returns are submitted in two months (bi-monthly), four months (quarterly), six months (semi-annual), or annually. How often VAT returns are submitted depends on the amount of VAT liability.

Generally, bi-monthly VAT returns are submitted. However, if the VAT liability of the taxable person is between EUR 3,001 and EUR 14,400, quarterly VAT returns are submitted. A semi-annual VAT return may be filed when the VAT liability is below EUR 3,000. Those who make equal installments by direct debit annual VAT return are allowed.

Monthly VAT returns are only necessary when the taxable person is in a VAT repayment regime.

All VAT returns are submitted by the 19th of the month following the reporting period.

Penalties for Failure to File Tax Return

Failure to meet one of its VAT obligations, including filing a timely VAT return, will result in penalties being imposed on taxable persons in breach of VAT rules and regulations. These penalties vary depending on whether the breach results from deliberate or careless behavior.

The EUR 4,000 penalty is imposed on taxable persons who fail to register for VAT, do not charge the VAT and pay VAT to the competent body, or do not respect bookkeeping requirements.

Taxable persons who do not have or issue correct VAT-related documents, such as invoices, notes, statements, or similar, may face penalties of between EUR 3,000 and EUR 5,000.

VAT Rules for Electronically Supplied Services 

The EU Directive 2006/112/EC, commonly called the EU VAT Directive, defines Electronically Supplied Services (ESS) as services that are provided automatically over the Internet with no human effort. Even if there is a human factor in providing services, it must be minimal, as these services heavily rely on automation.

Other terms, such as digital services, digital products, or electronic services, are also used in practice. Therefore, those who come across these terms should remember that they refer to the ESS.

As an EU Member State, Ireland adopted and implemented taxability rules relating to the supply of ESS. By doing so, Ireland reconciled its national rules with those applicable throughout the EU.

Taxability Rules for ESS:

Implementing the E-commerce reformatory package in 2021 was pivotal for introducing EU-wide ESS rules. This package resulted from years of effort to bring the EU VAT regulatory framework closer to answering the needs and challenges in the digital world.

B2B supply of ESS is subject to the general rules for determining the place of supply. This helps all stakeholders or parties involved in a transaction understand the applicable tax rules. Regarding the place of supply for B2C ESS supplies, the destination principle is critical to determining the place of supply for tax purposes. Based on that principle, customer location is the place of supply.

The E-commerce package brought a unified EUR 10,000 threshold, which is essential for determining which rules apply to the distance sales of goods and ESS. Taxable persons engaged in taxable activities whose annual turnover from those activities is above the threshold must apply the VAt rates defined in the country where their customer resides. Those who remain under the threshold may choose between applying their home country's VAT rates or voluntarily registering and utilizing One-Stop Shop (OSS) schemes.

How much is VAT in Ireland on ESS?

The Ireland VAT rate for ESS is 23%.

E-Commerce Rules

The E-commerce package changed the VAT rules applicable to the e-commerce industry, not only for the EU Member States and their taxable persons but also for all those participating in the EU market. This reform aimed to reduce administrative burdens, clarify rules, and level the playing field between EU and non-EU businesses.

To level the playing field between EU and non-EU businesses, the EU abolished the previously established EUR 22 threshold and introduced a new EUR 150 threshold for low-valued goods imported from non-EU countries or territories.

As explained in the taxability rules for ESS, this package introduced the EU-wide EUR 10,000 threshold for intra-community distance. With this move, the EU Member States abolished their national threshold, which caused many challenges and problems for all involved in these transactions.

Another significant novelty was the introduction of the deemed supplier rule for online marketplaces and other digital platform operators. Under this rule, the VAT liability is transferred from the underlying supplier to the digital platform operator once the conditions are met.

Besides these changes and novelties, the 2021 reform improved the Mini One Stop Shop (MOSS) established in 2015. The two schemes established under the MOSS were redefined and adjusted, whereas the third was introduced—the Import One Stop Shop (IOSS).

With these changes, the new One Stop Shop (OSS) was established with three schemes:

• Union Scheme,

• Non-Union Scheme,

• Import Scheme.

VAT EU Reporting

Taxable persons in Ireland face two different VAT EU reporting obligations: the EC Sales List and Intrastat.

EC Sales List

The EC Sales List (ESL) is a tax document that contains all the information related to the supply of goods and services between two VAT-registered taxable persons from different EU Member States. The ESL is submitted monthly if the supplies are above EU 50,000 for goods. Those who only supply services may choose between submitting quarterly or monthly statements only.

Intrastat

Intrastat is a monthly statistical report that contains relevant data on the supply of goods between VAT-registered businesses in EU member States. The obligation to submit Intrastat is triggered once the threshold for annual EU imports and exports, that is, arrivals and dispatches, is exceeded. 

Thresholds are EUR 500,000 for EU arrivals and EUR 635,000 for EU dispatches.

Digital Reporting

There are no specific digital reporting requirements for residents or non-resident taxable persons. There are no B2B, B2C, or B2G e-invoice obligations, nor any other such as SAF-T.