What is Postponed Accounting for VAT?

Feb 23, 2021

A scheme to allow Postponed Accounting for VAT on imports has been available to VAT-registered traders in Ireland since 11.00pm on 31 December 2020. This scheme is intended to alleviate cash flow issues which could arise following Brexit where VAT-registered businesses may otherwise have to pay import VAT when the goods are imported, and then recover the VAT when the next VAT return is filed. Find out how the scheme works in practice.

The scheme:

  • postpones accounting for VAT on imports from non-EU countries (including Great Britain but not Northern Ireland)
  • enables traders to account for import VAT on a VAT return rather than paying the VAT immediately on imports
  • allows traders to reclaim VAT at the same time that it is self-accounted for on a VAT return (subject to the normal rules of deductibility).

Traders in Ireland who acquire goods from countries outside the EU’s VAT area can use the Postponed Accounting for VAT arrangements. Traders who do not meet certain criteria may be excluded from the scheme. Criteria include compliance with tax and customs as well as viability of business operations and capacity to pay VAT liabilities. Revenue’s Tax and Duty Manual VAT-Postponed Accounting sets out more detail.

It is not compulsory to use the Postponed Accounting arrangements; import VAT can be paid upfront at time of importation instead. Alternatively, the deferred payment system for VAT on imports may also be used by authorised importers, which defers the payment of import VAT (and customs duties) until the 15th of the month following importation.