Two-tier VAT registration system introduced
Irish tax Authorities have developed a two-tier VAT registration system whereby a foreign business can apply for a ‘domestic-only’ registration or an ‘intra-EU’ registration. If a business registers for domestic-only purposes and subsequently wishes to engage in intra-EU trade, it may then submit an application for an intra-EU registration. This change came into effect on 17 June 2019. All existing VAT registered customers were deemed to be intra-EU VAT registered.
VAT return - Periodicity
You can opt for filing returns on a bi-yearly period [6-month period] provided your yearly [net] VAT liability is below € 3.000 or filing returns on a tri-annual basis [every four months] provided the yearly [net] VAT liability is between € 3.001 - € 14.400. Taxpayers with low turnover or who pay their VAT liability by monthly direct debit payment can file their VAT returns on an annual basis if approved by the Irish tax authorities.
Local reverse charge in the construction sector
Sub-contractors not established in Ireland who provide to a principal contractor construction services which are within the scope of Relevant Contract Tax [RCT] are not required to register for VAT purposes (special reverse charge). VAT on construction services that are not subject to RCT will continue to be taxed under the normal VAT system.
Payment of VAT [Tip]
A taxpayer with bi-monthly VAT liability of up to € 50.000 may pay VAT by direct debit in monthly instalments. If a business is seasonal, you can vary the amounts paid each month to reflect cash flow. You should make sure that the amount of VAT paid by direct debit is sufficient to cover ongoing liabilities. Where necessary, you should adjust the direct debit amounts to ensure the payments are adequate. At the end of the year, if a shortfall arises, the balance should be included when submitting the end-of-year VAT return. Where insufficient amounts are paid by direct debit and, as a result, the balance is more than 20% of the annual liability for VAT, you will be liable to an interest charge backdated to the mid-point of the year.
Non-established traders installing or assembling goods
A non-established trader is not required to register for Value-Added Tax (VAT) where he or she supply goods in the State which are installed or assembled with or without a trial run, by or on behalf of the trader and the recipient of those goods in the State is:
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- a VAT-registered person
- a Government Department or a local authority
- a body established by statute
- an exempt person.
Typical examples include the supply, installation and assembly of:
- exhibition stands
- movable shop counters
- computer systems
- electrical generators.
Instead, the customer must register and self-account for the VAT due.
However, if the customer is a private individual, the non-established trader must register and account for Irish VAT.