Revenue has published a new Tax and Duty Manual to provide guidance on the VAT treatment appropriate to Deposit Return Scheme (DRS) refunds. The DRS came into operation on 1 February 2024 and provides for a small refundable deposit on drink products supplied in plastic bottles and aluminium or steel cans. The deposit is refunded to a person who returns an empty container to the DRS for recycling or reuse.
Section 92A VATCA 2010 legislates for the VAT treatment of the DRS. Because it is not possible for businesses in the supply chain (e.g. manufacturers, importers, wholesalers, retailers) to know at the time they make their supplies whether or not containers will eventually be returned when they are empty, no VAT arises on supplies of drink products in the supply chain. VAT on the deposit only arises where the container is not returned under the DRS, in which case it is the Scheme Operator, Re-turn, who is liable to account for and pay the tax. Re-turn was appointed by the Minister for the Environment, Climate and Communications to operate the DRS.