Value-Added Tax

How is VAT charged?

Value-added tax is chargeable on the supply of goods and services within the State by a taxable person in the course or furtherance of any business carried on by him and on goods imported into the State from outside the EU. VAT is also chargeable on the intra-Community acquisition of goods by VAT-registered persons and on the intra-Community acquisition of new means of transport such as motor vehicles, boats etc. by either a registered or an unregistered person. The amount on which VAT is chargeable is the total consideration that the person supplying goods or services becomes entitled to receive. Taxable persons account for VAT on their outputs and are allowed credit against this liability for tax borne on business purchases and other inputs as evidenced by correctly prepared VAT invoices.

Taxable persons (generally, people or corporate entities in business) must be registered with the Revenue Commissioners for VAT purposes where the amount of their annual turnover (i.e. the amount of receipts excluding VAT) from the supplies of taxable goods and services exceeds or is likely to exceed certain limits. A detailed definition of a taxable person (or "accountable person") is included in Section 8 of the Value-Added Tax Act 1972 as amended.

Farmers, sea fishermen and traders whose turnover is below these limits are not generally obliged to register for VAT, but they may do so if they wish.

What are the current VAT rates?

Exempt

Details of exempt activities are set out in the First Schedule to the Principal Act. They include medical, dental and optical services, certain child-care and homecare services, certain banking and stock exchange activities, certain welfare and non-profit-making activities etc. Those carrying on exempted activities cannot, with some minor exceptions, register for VAT.

Zero rate

Details of goods and services taxable at this rate are set out in the Second Schedule to the Principal Act. The main zero-rated goods and services are:

  • Most food and drink of a kind used for human consumption

  • Most exports of goods and services relating to the exports of goods

  • Oral medicine

  • Fertilizers

  • Most articles of personal clothing and footwear suitable for children under 11 years of age

  • Certain services relating to marine safety

  • Certain books and booklets, including atlases

  • Certain medical equipment and appliances

  • Certain navigation services

  • Supplies to certain international bodies.

4.8% rate

This rate applies to livestock, which includes live cattle, sheep, pigs, goats, deer, horses and greyhounds.  

13.5% rate

Goods and services which attract VAT at 13.5% include certain fuels, building services, newspapers, magazines and periodicals, repair, cleaning and maintenance services generally, holiday accommodation, certain photographic supplies, restaurant services, and provision of commercial sporting facilities. Details of goods and services taxable at this rate are set out in the Sixth and Eighth Schedules to the Principal Act.


21% rate

All goods and services that do not fall into the categories mentioned above are liable to VAT at this rate.

 

When is VAT not deductible?

No deduction is allowed in respect of tax paid on expenditure on the following:

  1. The provision of food, drink, accommodation or other personal services supplied to the taxable person, his agent or his employees.
  2. Entertainment expenses incurred by the taxable person, his agent or his employees.
  3. The acquisitions, hiring or leasing of motor vehicles other than as stock in trade or for the purposes of a business that consists in whole or part of the hiring of motor vehicles or for use in a driving school business for giving instruction.
  4. The purchase of petrol otherwise than as stock in trade.
  5. Expenditure incurred on food, drink, accommodation or other entertainment services as part of an advertising service is not deductible in the hands of the person providing that advertising service.
  6. Any VAT incurred by a taxable person in a transaction where the margin or auction schemes apply.

VAT Registration Thresholds


The VAT registration thresholds for small businesses are €37,500 in the case of services and €75,000 in the case of goods. 

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