Value Added Tax Value Added Tax (VAT) Indirect Tax Charged on sales transactions Collected by VAT registered businesses and traders VAT Consolidation Act 2010 (VATCA)

Value Added Tax Value Added Tax - Definitions VAT Registered Person Input Credit Output VAT VAT Exclusive VAT Inclusive

Value Added Tax VAT Rates Zero Rate – 0% Reduced Rate – 13.5% Second Reduced Rate – 9% Standard Rate – 23%

Value Added Tax Exempt Supplies Exempt from VAT Supplier of exempt supplies cannot register for VAT Supplier of exempt supplies cannot charge VAT Supplier of exempt supplies cannot claim input credits for VAT incurred

Value Added Tax Exempt Supplies Financial Services Insurance Services Postal Services National Broadcasting Education Medical, Dental, Optical, Hospital services

Value Added Tax Zero rated versus Exempt Supplier of zero rated supplies must register for VAT, charge VAT and can claim input credits for VAT incurred Supplier of exempt supplies cannot register for VAT, cannot charge VAT and cannot claim input credits for VAT incurred

Value Added Tax General Principles VAT is borne by the final consumer (non-VAT registered person) Collected at each stage of the supply chain Each supplier has obligation to charge VAT and entitlement to claim input credits for VAT they have incurred The VAT registered supplier acts as collector of the tax

Value Added Tax VAT Amount Net amount = VAT exclusive amount Gross amount = VAT inclusive amount VAT is calculated as a percentage of the net amount It may also be necessary to be able convert the gross amount to the net amount

Value Added Tax VAT Charge – VAT charged on following transactions The supply for consideration of goods by a taxable person acting in that capacity when the place of supply is the state The import into the state On the supply for consideration of services by a taxable person acting in that capacity when the place of supply is the state

Value Added Tax VAT Charge – VAT charged on following transactions On intra-community acquisition for consideration by an accountable person of goods (other than new means of transport) when the acquisition is made within the state The intra-community acquisition for consideration of new means of transport when the acquisition is made within the state

Value Added Tax VAT Charge – VAT charged when all of the following conditions are met: There is a supply of goods or services Within the State For consideration Made by a taxable person In the course or furtherance of business

Value Added Tax VAT Charge There must be a direct link between the supply and the consideration

Value Added Tax VAT Registration – The following must register for VAT: Persons whose taxable supplies of services are likely to succeed €37,500 in any 12 month period Persons whose taxable supplies of goods are likely to succeed €75,000 in any 12 month period

Value Added Tax VAT Registration – The following must register for VAT: Business persons who are normally exempt and acquire goods in excess of €41,000 annually from other EU countries Persons making mail order/distance sales into the State, the value of which exceeds €35,000 in any 12 month period Persons who acquire services from abroad

Value Added Tax VAT Registration Sole Trader/Partnership registers using TR1, Company registers using TR2 A person who fails to register when obliged to do so is liable to penalty of €4,000 A person can deregister from VAT when: Turnover falls below the thresholds Person ceases to trade

Value Added Tax Electing to register for VAT The following can elect to register for VAT: Established traders who supplies do not exceed the relevant thresholds Farmers Sea fishermen who supply unprocessed fish to other accountable persons

Value Added Tax Advantages of electing to register for VAT Recovery of VAT on start up costs A person who makes zero rate supplies would get VAT refunds

Value Added Tax Disadvantages of electing to register for VAT Cost of administration of VAT Risk of VAT inspection If the VAT registration is cancelled, the person may have to repay input VAT recovered