24. Intra-Community acquisitions of goods

Summary

This section defines intra-Community acquisitions (ICAs) of goods. These are movable goods supplied from one Member State to another, which are transported to the second Member State. In general, both the supplier and the customer must either be VAT-registered, carrying out exempt activities, or flat-rate farmers. These conditions do not apply to ICAs of new means of transport.

Details

(1)(a) An ICA of goods is defined in subsection (1)(a) as the acquisition of movable goods, apart from new means of transport, supplied by a person in one Member State (provided that that person is, or ought to be, registered for VAT, or carries out an exempt activity or is a flat-rate farmer) to a person in another Member State (subject to the same provisos as above) and those goods have been transported from one Member State to another.

(1)(b) The concept of ICA of goods is extended in subsection (1)(b) to cover the acquisition of a new means of transport supplied by a person in a Member State to a person in another Member State and sent from one Member State to another Member State. ‘New means of transport’ is defined in section 2(1).

Example: ICAs from other Member States are accounted for under the system of “postponed accounting” as follows:

• Supply is zero-rated in Member State of dispatch as an EU intra-Community supply (ICS) (assuming the supplier has the purchaser’s VAT number, etc. and is satisfied that it is an ICS).
• Purchaser makes an ICA and is liable for VAT on the ICA, at the rate appropriate to the goods in his/her Member State.
• Purchaser declares a liability for VAT (i.e. charges himself/herself VAT) in the VAT return for the taxable period in which the ICA took place.
• If the purchaser is entitled to deduct, the VAT payable is simultaneously deducted in the same taxable period, thus effectively cancelling out the VAT liability.
• The purchaser accounts for VAT on any subsequent supply of the goods in the normal way – i.e. when he/she sells the goods on, VAT is charged to the customers and paid over for the relevant VAT periods.

(Note that there are 2 statistical boxes on the trader’s VAT return (“VAT 3”) covering intra-Community transactions.)

(2) Goods that have been subject to tax under the margin scheme or the special scheme for auctioneers in one Member State and dispatched to another Member State are not treated as ICAs in the Member State of arrival.

(2A) Subsection (2A) provides that [with effect from 1 July 2022] goods purchased by the armed forces of a Member State taking part in an EU common security and defence policy (CSDP) for the use of those forces or their civilian staff which have not been subject to tax at the time of purchase in a Member State shall be treated as an intra-Community acquisition of goods for consideration where their importation would not be eligible for an exemption in the Member State where purchased.

This relates to goods purchased in a Member State by the forces of another Member State that are stationed in that Member State, where those goods were not purchased under local VAT rules in that host Member State and where an exemption from VAT on the importation of those goods was not applicable.

(3) Subsection (3) sets out a number of deemed provisions for the purposes of the definition of intra-Community goods (this section) and the place of supply of intra-Community goods (section 32), as follows:

• (3)(a) A transaction in another Member State is deemed to be a supply in a case where a similar transaction would be a supply under Chapter 1 or under Chapter 1 of Part 4, if it had taken place in the State.
• (3)(b) An activity occurring in another Member State is deemed to be an exempt activity if, had it occurred in the State, it would have been an exempt activity.
• (3)(c) A person in another Member State is deemed to be a flat-rate farmer if, had he or she been carrying out the same work in the State, he or she would be a flat-rate farmer.
• (3)(d) A person in another Member State is deemed to be a taxable person or entitled to elect to be a taxable person if, had he or she been active in the State, he/she would be an accountable person or entitled to elect to be an accountable person.

(4) There is a special rule in subsection (4) for goods that are consigned from outside the Community to non-taxable entities in the State, in situations where the goods are imported through another Member State (MS) (and hence subject to VAT in that MS). In such cases, the subsequent arrival of the goods in the State is treated as an ICA.

The purpose of this provision is to prevent non-taxable entities from selecting a low-rate Member State as the place in which they are to be taxed when importing goods into the Community. The rule in subsection (4) ensures that an ICA arises in Ireland. If the trader’s ICAs exceed the threshold (currently €41,000) Irish VAT will be charged on the acquisition of the goods. The import VAT paid in the other Member State is refundable in that Member State – see also notes on section 54 - provision exists in that section for repayment of VAT charged on the importation of goods into the State which are consigned to other Member States in the reverse of the circumstances outlined here.

Relevant Date: Finance Act 2020