Revenue Note for Guidance

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Revenue Note for Guidance

56. Zero-rating scheme for qualifying businesses


This section, together with paragraph 7(7) of Schedule 2, sets out a scheme to facilitate business. This section provides that a person may apply to have his or her business inputs (goods, services, intra-Community acquisitions, imports) zero-rated where that person is a qualifying person who can demonstrate that he or she derived 75% or more of their total turnover in in the 12 months immediately preceding the application for section 56 authorisation from:

  1. supplies of goods made in accordance with paragraph 1(1) or 3(1) or (3) of Schedule 2,
  2. supplies of contract work where the place of supply is deemed to be a Member State other than the State, and
  3. supplies of contract work made in accordance with paragraph 3(4) of Schedule 2.

The zero-rating does not apply to supplies in respect of which VAT would not be deductible in the normal course – for example, petrol, food, drink or most accommodation.

Once a person has been authorised by Revenue to use the scheme, VAT is not charged to him/her in respect of any supplies of qualifying goods and services (as defined).


(1) The terms “authorised person”, “qualifying person”, “qualifying goods” and “qualifying services” are defined for the purposes of the scheme.

  • Qualifying persons are those persons whose turnover from exports or intra-Community supplies exceeds, or is likely to exceed, 75% of total annual turnover. For the purposes of establishing annual turnover, sale and leaseback transactions are excluded.
  • Qualifying goods and services covers taxable goods and services, but excludes the supply or hire of a car, petrol and the provision of food or drink, accommodation (other than qualifying conferences), entertainment services or other personal services. VAT on those goods and services would not be deductible in the normal course, so they are not covered by the scheme.

(2) Subsection (2) sets out all of the conditions that must each be met by a person who wishes to become an authorised person.

(2a) Subsection (2)(a) provides that a person must complete an application form as provided by the Revenue Commissioners for the purposes of becoming an authorised person.

(2)(aa) Subsection (2)(aa) provides that the person applying for section 56 authorisation shall provide certain particulars in the application form as part of the application. These particulars are contained in regulations made by the Revenue Commissioners under section 120(7)(ab) of the Act.

(2)(b) Subsection (2)(b) provides that the person must certify the particulars that the particulars shown on the form are correct.

(2)(c) Subsection (2)(c) provides that the person must submit the completed and certified application form to the Revenue Commissioners, together with such further information in support of the application as may be requested by the Revenue Commissioners.

(3) Subsection (3) sets out details about when authorisations are issued, the period of their validity, ceasing authorisation.

  • (3)(a) Subsection (3)(a) provides that the Revenue Commissioners will issue a section 56 authorisation to a person where the Revenue Commissioners are satisfied that there is no risk to revenue, the person is a qualifying person (within the meaning of section 56(1)) and the relevant particulars have been provided. This section also provides that where the Revenue Commissioners are not satisfied that these conditions have been met, they will refuse to issue an authorisation.
  • (3)(aa) Subsection (3)(aa) provides that where the Revenue Commissioners refuse to issue an authorisation, they will give notice in writing to the person concerned of that decision, and the reasons for the decision.
  • (3)(ab) Subsection (3)(ab) provides that where an authorisation is issued to a person under section 56, that authorisation is subject to the authorised person keeping full and true records in accordance with section 84 and complying with the provisions of a number of acts and statutory instruments.
  • (3)(b) The authorisation certificate issued in accordance with paragraph (a) will be valid for such time as Revenue determine. (This will vary depending on the type of operation involved).
  • (3)(c) Where an authorised person ceases to qualify, he/she is obliged to notify Revenue in writing of that fact not later than the end of the taxable period in which he/she ceased to be a qualifying person.
  • (3)(ca) Subsection (3)(ca) obliges an authorised person to inform the Revenue Commissioners immediately if there is any change in the particulars provided under subsection 2(aa).
  • (3A)(a) Subsection (3A)(a) provides that the Revenue Commissioners will cancel an authorisation issued to a person where they are satisfied that the person is no longer a qualifying person, the person furnished (or had furnished on their behalf) particulars which are false, incorrect or misleading in a material respect, or the person has failed or is failing to comply with the conditions contained in subsection (3)(ab). The person to whom the cancellation is directed will be informed by notice in writing by the Revenue Commissioners.
  • (3A)(b) Subsection (3A)(b) provides that a cancellation will have effect from the date specified in the notice issued if there is no appeal under subsection 10 against the notice, or on the date on which an appeal is determined or is withdrawn or abandoned, if an appeal is brought under subsection (10).
  • (3B) Subsection (3B) enables the Revenue Commissioners to take a number of steps where an authorisation has been cancelled under subsection (3A). Where an authorisation is cancelled under subsection (3A), and it appears requisite to the Revenue Commissioners to do so for the protection of the revenue, the Revenue Commissioners may inform the suppliers of the person to whom the cancelled authorisation related of the cancellation. The Revenue Commissioners may also publish a notice containing the cancellation of an authorisation in Iris Oifigiúil and otherwise make publicly available the notice of cancellation. These powers to publicise a cancellation are notwithstanding any obligations as to secrecy or other restrictions on the disclosure of information.

(4) The authorised person is required to forward a copy of the authorisation certificate to each of his/her suppliers in the State.

(5) The supplier of taxable goods or taxable services to the authorised person must quote the authorisation number on all invoices and other documents issued in relation to goods or services supplied to the authorised person.

(6) There are conditions that must be fulfilled in order for an authorised person to be allowed to import goods at the zero rate—

  • a copy of the authorisation certificate must be produced with the relevant customs entry, and
  • that customs entry must include both a declaration by the authorised person (or his/her representative) that he/she is an authorised person and a claim for the zero-rating of the importation.

(7) Any subsequent supply by the authorised person of developed property, which has been zero-rated to him/her under this provision, remains liable to VAT. This is ensured by deeming the zero-rated supply to be tax which is deductible under Chapter 1 of Part 8 for the purposes of section 93.

(8) Subsection (8) deals with non-deductible items. It ensures that, if a service is received at the zero rate and the service is received for a non-business or exempt purpose (i.e. all the tax would not have been deductible), VAT is payable on the cost of the service as a self-supply.

(9) Subsection (9) covers implementation. It allows an officer of Revenue to perform any powers, functions or duties of Revenue specified in this section.

(10) Subsection (10) enables a person aggrieved by a refusal under subsection (3)(a) to issue an authorisation, or a person aggrieved by the cancellation of an authorisation under subsection (3A), to appeal those decisions to the Appeal Commissioners in accordance with section 949I of the Taxes Consolidation Act 1997 within 30 days after the date of the notice of the decision.

Relevant Date: Finance Act 2020