Revenue Information Note

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VAT Treatment of Alcohol Products

Introduction

1. This leaflet sets out the rules that apply to the payment of VAT on the supply of alcohol products, as provided for in the Value Added Tax Consolidation Act 2010 (VATCA).

Special rules apply to supplies of alcohol products in the following circumstances;

  • while held or transported under a duty suspension arrangement,
  • from another EU Member State where excise duty has been paid in the Member State of despatch,
  • on importation from outside the Community, and
  • purchase of petrol;
  • distance sales to private individuals in Ireland.

All other supplies of alcohol products, however, are subject to normal VAT rules and are not, therefore, particularly addressed in this leaflet.

Scope

2. The alcohol products concerned are spirits, wine, other fermented beverages, intermediate beverages, beer, cider and perry.

Supply under a Duty Suspension Arrangement

3. In general, VAT is not chargeable on the supply of alcohol products from any source (imports, EU intra-Community acquisitions or home produced) while held under a duty suspension arrangement [1]. The supply of alcohol products while held under duty suspension does not constitute a supply for VAT purposes. Rather it is the final supply that forms the basis for the charge to VAT which is payable along with the excise duty at the time the goods are removed from duty suspension [2]. Any previous supply, EU intra-Community acquisition or importation, should be disregarded.

4. The VAT due on such final supply will not be chargeable on the VAT invoice issued at the time of supply but will, instead, be payable with the excise duty by the owner at the time of the removal of the goods from duty suspension. Accordingly, where alcohol products are supplied while held under a duty suspension arrangement, VAT should not be charged by the supplier or shown on any invoice issued in respect of the supply.

Intra-Community Acquisitions of Alcohol Products where Excise Duty has been paid in Member State of despatch.

5. In the case of intra-Community acquisitions (trader to trader consignments) of alcohol ("duty paid" in the Member State of despatch) VAT is not accounted for under the postponed accounting arrangements that apply to intra-Community acquisitions generally. Instead, VAT is payable at the same time as the Excise Duty is payable in the State [3]. The amount on which VAT is chargeable is the invoiced price of the goods increased by the amount of the excise duty payable.

Importations of Alcohol Products from outside the EU

6. VAT at point of entry is not chargeable on imported alcohol products being entered into an excise duty suspension arrangement (tax warehousing). Instead, the VAT due on the importation is payable with the excise duty on removal of the goods from duty suspension [4]. If, following importation, the alcohol products in question are supplied while held under duty suspension, the rules set out at paragraphs 3 and 4 above apply and the supply should be disregarded for VAT purposes. The taxable amount is the value for customs purposes increased by the amount of customs duty and excise duty payable.

Distance Sales to private individuals

7. Distance sales [5] of alcohol products from another Member State (or from a third country imported through another Member State) to a private individual are always subject to VAT and excise in the Member State of destination. The supplier is required to be registered for VAT in Ireland for all such supplies to private individuals in the State and arrange for payment of VAT under the normal rules.

Please also read Revenue Public Notice: PN 1879 - Unaccompanied Import of Excisable Products from EU Member States for Personal Use.

Deferred Payment

8. The legislation relating to the collection of excise duty also applies [6] to the collection of VAT under the arrangements outlined in paragraphs 3 to 6 above. This also means that where a trader has the facility to defer payment of excise duty, payment of VAT can also be deferred to the same date.

Persons Authorised under Section 56 of the VATCA

9. Persons authorised to receive goods at the zero rate of VAT in accordance with section 56 of the VATCA will not be required to pay the VAT due on removal by them of alcohol products from a tax warehouse or other duty suspension arrangement. This does not affect their liability to pay excise duty.

Forms to be Used

10. The following forms should be used for payment of the excise duties and VAT:

  1. excise duty entry (C&E 1087) for EU intra-Community acquisitions where the excise duty and VAT is being paid on arrival in the State;
  2. SAD (import entry) for imports where the excise duty and VAT is being paid on arrival in the State;
  3. home consumption warrant (C&E 1115) in respect of deliveries from warehouse for home consumption. (It should be noted in particular that it is not permitted for warehouse keepers to produce single bulk warrants on behalf of a number of owners of goods - a separate warrant for each owner must be presented.)

VAT Deductibility

11. Subject to the normal rules governing VAT deductibility, a trader is entitled to deduct the VAT charged under these arrangements in the VAT return for the period in which the liability arises (i.e. the period in which the VAT is paid with the excise duty). The additional records and documentary evidence that the trader must retain in support of his claims to deductibility are as follows:

  1. in the cases referred to at 10(a) and (b) above, a monthly customs and excise statement where the trader uses the deferred payment/FACT schemes, or an official receipt in other cases;
  2. in the case referred to at 10(c) above, a copy of the home consumption warrant signed and stamped by the warehouse officer.

Further information

12. Additional information may be obtained in the following public notices:

13. Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer’s affairs. Contact details for all Revenue Districts can be found on the Contact Details Page.

This leaflet is issued by:

VAT Interpretation Branch,
Indirect Taxes Division,
Stamping Building
Dublin Castle.
June 2012

Annex

Value-Added Tax Consolidation Act 2010 (No. 31)

Part 10 Special Schemes

92. Suspension arrangements for alcohol products.

92.- (1) In this section- “alcohol products” has the meaning assigned to it by section 73(1) of the Finance Act 2003;

" suspension arrangement" means an arrangement under which excisable products are produced, processed, held or moved, excise duty being suspended.

(2) Where alcohol products are supplied while being held under a suspension arrangement, then -

  1. any such supply effected while the products are held under that arrangement (other than the last such supply in the State) shall be deemed not to be a supply for the purposes of this Act other than for the purposes of Chapter 1 of Part 8, and
  2. any previous -
    1. intra-Community acquisition, or
    2. importation,
      of such products shall be disregarded for the purposes of this Act.

(3)

  1. Subject to paragraph (b), where tax is chargeable on a supply referred to in subsection (2), then, notwithstanding section 74(1), the tax on that supply shall be due at the same time as the duty of excise on the products is due.
  2. Paragraph (a) shall not apply to a supply of the kind referred to in paragraph 1(1) or (3), 3(1) or 7(6) of Schedule 2.

(4) Where (other than in the circumstances set out in section 11(2)), an accountable person makes an intra-Community acquisition of alcohol products and by virtue of that acquisition, and in accordance with Chapters 1 and 2 of Part 2 of the Finance Act 2001, and any other enactment which is to be construed together with those Chapters, the duty of excise on those products is payable in the State, then, notwithstanding section 75, the tax on that intra-Community acquisition shall be due at the same time as the duty of excise on the products is due.

(5) Where tax is chargeable on the importation of alcohol products, which are then placed under a suspension arrangement then, notwithstanding section 53(3), the tax on that importation shall be due at the same time as the duty of excise on the products is due.

(6) Notwithstanding sections 37(1) and (2) and 53(1), where subsection (3), (4) or (5) applies, the amount on which tax is chargeable shall include the amount of the duty of excise chargeable on the products on their release for consumption in the State.

(7) Notwithstanding any other provision to the contrary in this Act, where subsection (3), (4) or (5) applies, then-

  1. the tax shall be payable at the same time as the duty of excise is payable on the products,
  2. the provisions of the statutes which relate to the duties of excise and the management thereof and of any instrument relating to duties of excise made under statute, shall, with any necessary modifications and exceptions as may be specified in regulations, apply to such tax as if it were a duty of excise, and
  3. the person by whom the tax is payable shall complete such form as is provided for the purposes of this subsection by the Revenue Commissioners.

Footnotes

[1] VATCA, section 92(2)

[2] VATCA, section 92(6)

[3] VATCA, section 92(4)

[4] VATCA, section 92(5)

[5] Distance selling in the EU occurs when a supplier in one EU Member State sells goods to a person in another Member State who is not registered for VAT. It includes mail order sales, phone or tele-sales and physical goods ordered over the internet. The place of supply is the Member State of destination of the goods (VATCA, section 30). The threshold for registration does not apply to supplies of excisable goods to private individuals in Ireland where the supplier must be registered for VAT in the State in respect of all such supplies.

[6] VATCA, section 92(7)