VAT Retail Export Scheme – minimum threshold €75

Nov 23, 2020

The Government recently agreed to a Committee Stage Amendment to the Brexit Omnibus Bill, reducing the proposed minimum purchase threshold of the VAT Retail Export Scheme from €175 to €75. The Government says that the reduction considers the needs of the retail sector while also responding to concerns that there could be significant abuse of the scheme, given Ireland’s proximity to the UK and the volumes of traffic between the two countries.

The VAT Retail Export Scheme enables travellers that are resident outside the EU to benefit from VAT relief on goods that are purchased in the EU and subsequently exported when the traveller leaves. The UK residents will be eligible for VAT refunds on purchases of qualifying goods under the scheme, post Brexit.

The Minister for Finance, Paschal Donohoe, TD, said:

“By excluding goods below a certain value threshold from the Scheme and requiring proof of declaration of importation into the UK for any goods for which a refund is claimed by a UK based traveller, it is my intention to ensure that double non-taxation and scope for abuse of the scheme are minimised. This amendment is important for retailers, especially those whose businesses are engaged with the tourism sector.”

The reduction “retains protection for the Exchequer while also acknowledging the potential impact that not making this change would have on retailers across the island”, he said.

Reports suggest that the amendment to the Bill has not been well received by businesses, with the changes considered to be “wholly inadequate”.

France actioned to reduce the minimum purchase threshold for their VAT Retail Export Scheme from €175 to €100.01 in recent times also. Following a consultation process HM Treasury announced plans in September to withdraw the VAT Retail Export Scheme for non-EU visitors from 1 January 2020. This will make the UK one of the only countries not to offer tax-free shopping.

The VAT Retail Export Scheme does not apply between Ireland and Northern Ireland, as EU VAT rules on goods apply to Northern Ireland under the Ireland/Northern Ireland Protocol.

You can access the Brexit Omnibus Bill through the Oireachtas website.