In VAT Matters this month, David Duffy provides a summary of the latest Irish VAT developments.

Brexit

Last month’s edition summarised how VAT on imports into Ireland from Great Britain (GB) and other non-EU Member States could be dealt with under the new postponed import VAT accounting regime. This month, I summarise some of the other VAT implications coming from Brexit. Please note that these are not exhaustive.

The supply of goods dispatched from Ireland to GB is now as an export (rather than intra-Community supply of goods). As a result, there is no longer a requirement to obtain a GB customer’s VAT registration or report the sales on your VIES return in order to apply the zero-rate of VAT to those sales. However, the seller will generally need to prepare export declarations and retain proof of the goods physically leaving the State.

In contrast, sales of goods from Ireland to Northern Ireland (NI) continue to follow the intra-Community supplies rules. However, invoices for supplies to NI business customers and related statistical reporting (i.e. VIES and Intrastat) should quote the prefix “XI” in front of NI customer’s VAT registration number rather than the “GB” prefix.

While NI is part of the EU’s VAT area for goods, it is not for services.

The VAT treatment applicable to supply of most services between Ireland and the UK broadly remains the same. However, Irish VAT should no longer arise on the supply of certain services (e.g. consultancy, accounting) to non-business customers in GB or NI from 1 January 2021. In addition, supplies of certain services (e.g. leasing of movable goods) to customers outside the EU but “used and enjoyed” in Ireland could result in an Irish VAT charge.

While the VAT changes resulting from Brexit are likely to lead to additional complexities for Irish businesses in most cases, one of the upsides is that Irish companies that supply VAT exempt financial services to UK customers (both GB and NI) should be entitled to recover VAT on related costs as such services should be regarded as “qualifying activities” from 1 January 2021.

Revision to Return of Trading Details and extended filing deadline

In eBrief No. 008/21, issued on 22 January 2021, Revenue confirmed that the deadline for filing the annual VAT Return of Trading Details (“RTD”) for 2020 has been extended until 10 March 2021. This extension is due to revisions that are being made to the RTD to reflect the temporary 21 percent VAT rate that was in place for part of the year. Revenue have advised that the revised RTD will be available from 10 February 2021.

Temporary relief from VAT on Covid-19 vaccines and testing kits

Revenue confirmed in eBrief No. 010/21, issued on 26 January 2021, that its guidance on temporary VAT measures relating to Covid-19 has been updated to include the VAT treatment applicable to the supply of COVID-19 vaccines and testing kits.

Revenue will permit the 0% rate of VAT to apply to the supply and importation of COVID-19 vaccines and in-vitro diagnostic medical devices (testing kits), subject to certain conditions being satisfied. In addition, services closely linked to the supply of COVID-19 vaccines and testing kits will also qualify for VAT zero-rating where the services are directly linked and necessary for the supply of those vaccines and testing kits.

This concessional measure will apply from 12 December 2020 until the enactment of Finance Bill 2021. Revenue have also advised that if import VAT has been incurred on products since 12 December 2020 that would qualify for the zero rate, such VAT may be reclaimed.

Further information in respect of the temporary VAT measures applicable to COVID-19 vaccines, testing kits, personal protection equipment and other similar items is available on the Revenue website.

David Duffy

FCA, AITI

Chartered Tax Advisor,

Indirect Tax Partner at KPMG