VAT

Today the Irish Revenue Commissioners published eBrief No. 197/22 in relation to emergency accommodation and ancillary services.  For full information, please click: https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part03-taxable-transactions-goods-ica-services/Services/services-emergency-accommodation-and-ancillary-services.pdf

If you are providing Emergency Accommodation it is essential for you to consider the VAT implications.

The most important points are as follows:

• The use of State owned property for emergency accommodation is outside the scope of VAT.

• The supply of emergency accommodation in all/part of a house, apartment, bedsit or other similar establishment is exempt from VAT.

• Accommodation in a hotel or guesthouse which is contracted to a State agency is considered to be an exempt supply of emergency accommodation provided the following two conditions are met: (i) it is provided exclusively as emergency accommodation and (ii) it must not available to the general public as guest or hotel accommodation.

• The supply of accommodation in direct provision centres is also exempt from VAT as a supply of emergency accommodation.

• Ancillary supplies relating to the supply of emergency accommodation will be treated as exempt from VAT. These include laundry, security, reception and administration services.

• The Revenue Commissioners do not consider catering services to be ancillary to the supply of emergency accommodation. Therefore, catering services are liable to VAT at the appropriate VAT rate once the turnover from catering services exceeds, or is likely to exceed, €37,500 in any twelve month period.

• Where there is a supply of emergency accommodation and catering services, the consideration payable must be apportioned between (a) the exempt emergency accommodation service and (b) the taxable catering service. This will ensure that the correct amount of VAT is calculated on the taxable supplies.  It is also important for accurately computing VAT deductibility on costs.

• The business overheads should be apportioned between (i) taxable and (ii) exempt business activities. The VAT on costs associated with the exempt supply of emergency accommodation and ancillary services cannot be recovered. The VAT incurred on the costs of providing taxable catering services, however, are deductible in full.

• If the person providing the accommodation has waived their exemption from VAT in relation to residential property acquired before 2^nd April 2007 (i.e. apartments, houses, etc.) which are now used for the purposes of emergency accommodation then VAT at 23% (i.e. the current standard rate) will apply to such supplies.

• For residential properties including houses, apartments, etc, that have already been used for VAT exempt residential lettings, no Capital Goods Scheme adjustment will arise if the property is then used as emergency accommodation. The reason being that the property was already used for VAT exempt purposes.

• If, however, a property previously providing taxable supplies of hotel and guest accommodation is used for emergency accommodation, a Capital Good Scheme adjustment will be triggered. This could have serious VAT implications for the property owner (i.e. the holder of the capital good).

• For detailed information on the operation of the Capital Good Scheme, please click link: https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part11-immovable-goods/capital-goods-scheme/capital-goods-scheme.pdf

If you require further information on VAT issues, please contact us to make an appointment.

Today, Minister for Finance, Paschal Donohoe T.D., and Minister for Public Expenditure and Reform, Michael McGrath T.D. presented Budget 2023.

GLOBAL MOBILITY & EMPLOYMENT

Minister Donohoe announced an extension to a number of existing personal tax reliefs including:

• Special Assignee Relief Programme (SARP) is to be extended to the end of 2025.  The minimum income threshold for an employee to qualify for SARP is being increased from €75,000 to €100,000 for new entrants.  Existing claimants will not be affected by this change.  In other words, this higher qualifying threshold will not apply to current claimants availing of the relief.

• Key Employee Engagement Programme (KEEP) is to be extended to the end of 2025.  The lifetime company limit for KEEP shares will be raised from €3 million to €6 million.  KEEP is also being modified to provide for the buy-back of KEEP shares by the company from the relevant employee.
• Foreign Earnings Deduction (FED) which is a relief for employees who are tax resident in Ireland and who travel out of the State to temporarily carry out employment duties in certain qualifying countries was extended for a further three years to the end of 2025. FED provides relief from income tax on up to €35,000 of income.

• Another significant development was the doubling of the Small Business Exemption from €500 to €1,000 effective from 2022. Employers will also be permitted to grant an employee two vouchers/non-cash awards in a single year, provided the cumulative value of the two vouchers does not exceed €1,000.

PERSONAL TAX

Key measures include:

• A significant increase in the Standard Rate Cut-Off Point to €40,000 for single individuals and €49,000 for married couples with one earner. This means that a single person can now earn an additional €3,200 before paying tax at the 40% Income Tax rate.

• An increase of €75 in the Personal Tax Credit, Employee Tax Credit and the Earned Income Tax Credit (all currently set at €1,700). For the tax year 2023 onwards the new tax credits be each be €1,775

• An increase of €100 in the Home Carer tax credit. From 2023 it will be increased to €1,700.

• A reintroduction of the rent tax credit of up to €500 for renters in the private sector for 2023 to 2025. It will be possible to claim this tax credit on a retrospective basis in relation to rent paid in 2022.  One credit per person can be claimed per year.

• The Sea-going Naval Personnel Tax Credit has been extended to the end of 2023.

• An increase in the ceiling of the 2% USC rate from €21,295 to €22,920.

• The exemption from the top rate of USC for medical card holders, and those aged over seventy years earning under €60,000 will continue beyond 2022. In other words, the reduced rate of 2% USC will be extended until the end of 2023.

• There is no increase to Employer’s PRSI rates.

ENTERPRISE

• The Temporary Business Energy Support Scheme (TBESS) was introduced to support trading businesses. The scheme will be open to businesses carrying on a Case I trade that are tax compliant and have experienced a significant increase in their natural gas and electricity costs. Businesses carrying on trading activities will be eligible for a refund of 40% on the increase in electricity and gas prices, subject to a monthly cap of €10,000 per trade.  Detailed information on the scheme has not yet been published, however, it is believed the scheme will operate by comparing the average unit price for the relevant period in 2022 with the average unit price for the corresponding period in 2021. If the increase in average unit price is more than 50% then the business will be eligible for the scheme. Businesses will be required to register for the scheme and to make claims within the required time limits.  This scheme is subject to State Aid approval from the EU.

• Amendments will be made to the R&D tax credit regime with respect to how repayments are made under the scheme which will ensure the regime is regarded as a “qualifying refundable credit” for the purposes of the Pillar Two Model Rules. Currently the R&D tax credit is firstly offset against current and prior year corporation tax liabilities followed by repayment over three instalments. The current system is being changed to a new fixed three-year payment system. A company will have an option to call for payment of their eligible R&D Tax Credit or to request for it to be offset against other tax liabilities. In other words, the changes will enable taxpayer companies to call for the payment of their R&D tax credits in cash or for these to be offset against its tax liabilities in this three-year fixed period. The existing caps on the payable element of the credit are being removed. The first €25,000 of a claim will now be payable in the first year.  Transitional measures will be introduced for one year for those that already engaged in R&D activities and claiming the credit

• An extension to the Knowledge Development Box regime for a further four years to 31^st December 2026. Currently the KDB provides for a 6.25% effective rate of corporation tax on profits generated from exploiting certain assets, including patents and software developed through R&D activities carried out in Ireland. In preparation for the changes under the OECD Pillar Two agreement, the effective rate under the KDB regime is to be increased from 6.25% to 10%.  The policy document released by the Department of Finance states that the commencement of this rate will be determined by reference to international progress on the implementation of the Pillar Two Agreement but it is expected in 2023.

• The extension of the Film Corporation Tax Credit until December 2028. Film relief is granted at a rate of 32% of qualifying expenditure which is capped at €70 million.

PROPERTY

Help-to-Buy Scheme

The scheme will continue at current rates for another two years and will expire on 31^st December 2024

Vacant Homes Tax (“VHT”)

A VHT will apply to residential properties which are occupied for less than 30 days in a 12 month period.

Exemptions will apply where the property is vacant for “genuine reasons.”

The applicable tax rate is three times the existing local property tax (“LPT”) rate

Residential Development Stamp Duty Refund Scheme

The stamp duty refund scheme will continue until the end of 2025.

The stamp duty residential land rebate scheme allows for a refund of eleven-fifteenths of the stamp duty paid on land that is subsequently developed for residential purposes. was due to expire on 31 December 2022. It has been extended to the end of 2025.

Pre-letting Expenses on Certain Vacant Residential Properties

The limit for landlords claiming allowable pre-letting expenses is to be increased from €5,000 to €10,000.

The vacancy period is to be reduced from 12 months to 6 months.

Levy on Concrete Blocks, Pouring Concrete and other Concrete Products

A 10% levy was announced in response to the significant funding required in respect of the defective blocks redress scheme. A 10% levy will be applied to concrete blocks, pouring concrete, and certain other concrete products

This levy applies from 3rd April 2023.

VAT

9% VAT rate for hospitality and tourism sector

The 9% VAT rate currently in place to support the tourism and hospitality sectors will continue until 28^th February 2023.

9% VAT rate on electricity and gas supplies

The temporary reduction in the VAT rate applicable to gas and electricity supplies (from 13.5% to 9%) will be extended to 28^th February 2023.

Farmers’ Flat-Rate Addition

The flat-rate addition is being reduced from 5.5% to 5% in accordance with criteria set out in the EU VAT Directive.

This change will apply from 1^st January 2023.

Zero-rated supplies

From 1^st January 2023 VAT on newspapers, including digital editions will be reduced from 9% to 0%.

On 27th April 2022 Revenue updated its guidance material to provide clarity on the tax treatment of transactions involving crypto-assets.  This latest publication also provides worked examples.

The terms “cryptocurrency” and “cryptocurrencies” are not defined.

The Irish Central Bank places cryptocurrencies, digital currencies, and virtual currencies into the same category of digital money. It is important to bear in mind, however, that although defined in this manner, these “currencies” are unregulated and decentralised which means that no central bank either guarantees them or controls their supply.

Throughout Revenue’s updated document the term “crypto-asset” is used, which includes cryptocurrencies, crypto-assets, virtual currencies, digital money or any variations of these terms.  Revenue state that the information contained in their most updated guidance is for tax purposes only.

Under Section TCA97 Ch4 s71–5, an individual who is resident in Ireland but not Irish domiciled is liable to Irish income tax in full on his/her/their income arising in Ireland, and on “non-Irish income” only to the extent that it is remitted to Ireland.

This is known as the remittance basis of taxation.

It’s important to keep in mind that the remittance basis of taxation does not apply to income from an office or employment where that income relates to the performance of the duties of that office or employment which are carried out in Ireland.

Section 29 TCA 1997 is the charging section for Capital Gains Tax.

s29(2) TCA 1997 states that a person who is Irish resident or ordinarily resident and is Irish domiciled is chargeable to Irish CGT on gains on all disposals (on his/her/their worldwide assets) arising in the year of assessment regardless of whether the gains are remitted to Ireland or not.

s29(4) TCA 1997 states that an individual who is Irish resident, or ordinarily resident,  but not Irish domiciled is chargeable on gains arising on disposals of Irish assets in the year of assessment as well as on remittances to Ireland in the year of assessment in respect of gains on the disposals of foreign assets.  In other words, an Irish resident/ordinarily resident but non domiciled individual is liable to Irish CGT on remittances in respect of gains arising on the disposal of assets situated outside the state.

From professional experience, the location of the crypto asset is often difficult to prove.

According to Revenue’s most recent publication:

“… where a crypto-asset exists ‘on the cloud’, it will not actually be situated anywhere and therefore, cannot be
viewed as ‘situated outside the State’.”

If the crypto-asset isn’t located anywhere and isn’t, therefore, considered to be a “disposal of an asset outside the state” then the remittance basis of taxation does not apply and the gain arising will be liable to Irish Capital Gains Tax based on the residency rules of the individual.

As you can see, it is very much the responsibility of the taxpayer to be able to prove the location where the gain arose on the disposal of the crypto-assets.

Revenue have outlined their record keeping provisions in relation to all taxes as follows: https://www.revenue.ie/en/starting-a-business/starting-a-business/keeping-records.aspx

In situations where the records are stored in a wallet or vault on any device including a personal computer, mobile phone, tablet or similar device, please be aware that these records must be made available to Revenue, if requested.

As with all taxes, full and complete records must be retained for six years in accordance with legislation. It is important to keep in mind that these provisions apply to all taxpayers, including PAYE only taxpayers.

For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

Today, Revenue published e-Brief 45/22.  In it, the Irish Revenue Commissioners updated their guidance material in relation to the operation of the Section 56 authorisation regime to provide further clarity in relation to qualifying persons, imports as well as the cancellation of authorisations.

The section 56 authorisation enables the holder of such to receives supplies of goods and services in Ireland at the 0% rate of VAT.  This is known as a ‘56B’ authorisation.

Broadly speaking, a VAT registered entity is eligible to apply for a Section 56 authorisation where over 75% of their annual turnover is derived from qualifying sales including intra-community supplies of goods, exports and certain contract work.

The definition of a “qualifying person” is an accountable person whose turnover from zero-rated intra-Community supplies of goods, export of goods outside the EU and supplies of certain contract work equates to 75% or more of their total annual turnover for the twelve month period preceding the making of an application for Section 56 authorisation. (Section 52 FA 2021 amended the definition of “qualifying person” in section 56 VATCA 2010).

Start Up Situations

Previously, a person could only apply for a section 56 authorisation where they could demonstrate that they qualified for one in the twelve month period prior to making the application.  The updated Guidance material now includes an exception to this requirement for start-up entities, on an interim basis, provided certain criteria are met:

1. their turnover from zero-rated intra-Community supplies of goods, exports and certain supplies of contract work will exceed 75% of their total turnover in the first twelve months of trading

2. they satisfy all other conditions as set out under Section 56 and

3. the start up entity is a subsidiary of, or is otherwise connected to a company that is in possession of a current Section 56 authorisation.

The third condition will cause difficulties for many start-up companies, since in many cases they are new individual companies with no related entities. As such, it would appear the start-up would be required to wait the full twelve months before making a VAT56B application.

Renewals of existing Authorisations

e-Brief 45/22 confirms that for renewals of existing valid authorisations, the turnover figure, from audited financial statements for an accounting year end falling within the twelve month period preceding the application, may be used.

Interaction with postponed VAT accounting arrangements

As Section 56 Authorisation allows the importation of goods at 0% VAT rate, the holder of a section 56 authorisation is, therefore, not permitted to use postponed accounting arrangements.

Cancellation of an Authorisation

The cancellation of a VAT56B arises where Revenue is not satisfied that there is a continuing entitlement to such authorisation.

Revenue will cancel the authorisation, by notice in writing, in circumstances where:

1. the authorised person is no longer a qualifying person

2. the information provided, or the declarations made when applying for the authorisation were proven to be materially false, incorrect, or misleading

3. the authorised person fails to comply with the “Post authorisation obligations” outlined.

Where the authorisation is cancelled, a formal written notice will be issued to the accountable person outlining the grounds for cancellation.

Revenue can request documentation and proof from the accountable person in circumstances where it has reservations regarding the entitlement of that person to a Section 56 Authorisation.

The cancellation may be appealed to the Tax Appeals Commission.

For further information, please click: Section 56 Zero Rating of Goods and Services – [Section 56 Zero Rating of Goods and Services] (revenue.ie)

If you wish to make an appointment to discuss this area of tax, please email us at querie@accountsadvicecentre.ie

The VAT reclaim provisions contained in s74(4) VATCA 2010 have been abolished with effect from 1st January 2022.

From 1^st January 2022, a key change in the Finance Bill 2021 has been introduced in relation to the VAT treatment of cancellation fees, including non-refundable or forfeited deposits, retained by business in the event of a customer cancellation.

Cancellation fees including forfeited deposits would be liable to VAT on the basis that they are either (a) a payment for a vatable service or (b) a right to access a vatable service. This is especially relevant to businesses in the tourism industry including hotels and restaurants.

In this amendment, it would appear that the Irish Revenue Commissioners are applying the CJEU judgements in:

1. Air France–KLM C-250/14 and Hop!–Brit Air SAS C-289/14 and
2. MEO C-295/17 and Vodafone Portugal C-43/19

They also appear to be following HMRC’s lead, which, with effect from March 2019, changed its legislation stating that VAT would remain due on retained payments for unused services and uncollected goods.

Prior to 1st January 2022 the Irish Revenue Commissioners had taken the view that if the supplier received a deposit from a customer that the deposit should be treated as an advance payment and VAT would be due when the deposit is received.  If, however, the supply didn’t proceed then the vendor/supplier could claim a repayment of the VAT on the deposit.  This was on the basis that the receipt of the deposit was not considered to be VATable because no supply of service had taken place.  In other words, prior to the amendment in the Finance Act 2021, if the actual supply didn’t proceed, the supplier or vendor could still claim a refund of VAT which it previously accounted for on receipt of the non-refundable deposit.

Pre 1st January 2022, a number of conditions were needed to apply:

1. the supply didn’t take place because the customer has cancelled it.
2. the cancellation was correctly recorded in the books and records of the supplier.
3. the deposit was not refunded to the customer.
4. the customer wasn’t given any other consideration, benefit or supply in lieu of that amount.

The Finance Act 2021 change has deleted from our legislation the previous entitlement of suppliers to reclaim a refund of VAT in respect of the non-refundable deposit, however, it does not affect the VAT treatment of deposits that are refunded to customers.  The VAT relief should still be available on those deposits.

For further information, please click: https://www.revenue.ie/en/tax-professionals/documents/notes-for-guidance/vat/vat-guidance-notes-fa2021.pdf

From 1st July 2021 there will be major changes including:

• The current distance sales thresholds will be abolished.
• All B2C sales of goods will be taxed in the EU Member State of destination.
• The Mini One Stop Shop will be extended to include the B2C supply of goods in circumstances where those goods are shipped from one EU Member State to consumers in another EU Member State.  It will become the One Stop Shop.
• Existing thresholds for intra-Community distance sales of goods will be abolished and replaced by a new EU wide threshold of €10,000.
• The current VAT exemption at importation of small consignments up to €22 will be abolished.
• A new special scheme for distance sales of goods imported from third countries of an intrinsic value up to a maximum of €150 will be created called the Import One Stop Shop (IOSS).
• The IOSS will enable goods to be imported into the EU without the need for import VAT.  Instead VAT will become due in the country of the consumer. This can be paid through the monthly IOSS return and will only be applied to consignments of less than €150 in value.

1. The extension of the VAT Mini One Stop Shop (MOSS) to the One Stop Shop (OSS)

The Mini One Stop Shop (MOSS) has been in existence since 2015 and currently only covers the supply of telecommunications, broadcasting and electronic services from business to non-business customers (B2C) services within the EU.

Prior to the introduction of MOSS, it was possible for a business to have a VAT registration obligation in several jurisdictions.  By opting to use MOSS, however, that business is able to report its sales for all EU member states via one single quarterly return made to one Member State thereby notifying the Revenue Authorities in that jurisdiction of TBE sales in other EU Member States as well as facilitating the payment of VAT.  There are currently two types of MOSS scheme in existence: one for businesses established within the EU and the other for those established outside the EU.

From 1st July 2021, MOSS will become the One Stop Shop (OSS).

The scope of transactions covered by this declarative system will be extended to all types of cross-border services to the final consumers within the EU as well as to the intra-EU distance sales of goods and to certain domestic supplies which are facilitated by electronic interfaces.

The choice of the EU Member State in which a business can register for the One-Stop-Shop will depend on where they are established and whether they have one or more fixed establishments within the EU.

The use of the VAT One Stop Shop procedure will be optional.

Those businesses who opt for the procedure will only be required to submit a single quarterly return to the tax authorities of the country of their choice, via a dedicated OSS web portal. They will be required to apply the VAT rates applicable in the consumer’s country.

If the OSS is not availed of, then the supplier will be required to register in each Member State in which they make supplies to consumers.

Businesses will be required to follow certain rules, including the sourcing and retaining of documentary evidence in relation to where the customer is located in order to determine the country in which the VAT is due.

In summary, from 1^st July 2021, the MOSS Scheme will become the One Stop Shop and will include the following: (i) B2C supplies of services within the EU other than TBE services, (ii) B2C Intra-EU distance sales of goods, (iii) Certain domestic supplies of goods which are facilitated by electronic platforms/interfaces and (iv) Goods imported from third countries and third territories in consignments of an intrinsic value up to a maximum value of €150.

 2. Current distance selling thresholds will be abolished.

For the intra-EU distance sales of goods, the thresholds amounts of €35,000 to €100,000 within the EU will be abolished.

Currently a supplier who sells to consumers from other EU member states by mail order is obliged to register for VAT in the country to which the goods are delivered once the threshold amount has been reached.

From 1^st July, however, the current place of supply threshold of €10,000 for Telecommunications, Broadcasting and Electronic services will be extended to include intra-Community distances sales of goods.

This €10,000 threshold will cover cross-border supplies of TBE services as well as the intra-Community distance sales of goods but will not apply to other supplies of services.  This will result in a requirement to register for VAT in multiple jurisdictions, where the total EU supplies of goods and TBE services to consumers exceed €10,000 per annum.

To avoid this obligation the EU OSS scheme can be availed of.

In situations where the value of the sales does not exceed or is unlikely to exceed this threshold amount of €10,000, then local VAT rates may be applied instead of the VAT in the country of the consumer.  In other words, in such circumstances an Irish business can charge Irish VAT on its supplies.

In summary, from 1^st July 2021, the individual EU Member State’s distance selling thresholds will be abolished and replaced with an aggregate threshold of €10,000 for all EU supplies.  Please be aware that this exemption threshold will not apply on a State by State basis nor will it apply to separate income streams.  It is calculated taking into account all TBE services and intra-community distance sales of goods in all EU states.

3. VAT exemption at importation of small consignments of a value of up to €22 will be removed

Currently, imports of goods valued at less than €22 into the EU are not liable to VAT on importation. From 1^st January 2021 the low value consignment stock relief for goods valued at €22 or below will be abolished resulting in all goods being imported into the EU now being liable to VAT.

For consignments of €150 euros or below, however, a new import scheme will apply. The seller of the goods or, in the case of non-EU retailers, the agent, will only be required to charge VAT at the time of the sale by availing of the Import One Stop Shop.  If they decide not to opt for this scheme, they will be able elect to have the import VAT collected from the final customer by the postal or courier service.

4. Special provisions where online marketplaces/ platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves i.e. deemed supplier provision

Over the last number of years, there has been considerable growth in online marketplaces and platforms providing B2C supplies of goods within the EU.  Currently, however, this environment is difficult to monitor and as a result, businesses established outside the EU are slipping through the VAT net.

From 1^st July Special provisions will be introduced whereby a business facilitating sales through the use of an online electronic interface will be deemed, for VAT purposes, to have received and supplied the goods themselves – this will be known as the “Deemed Supplier” Provision.

In other words, the online marketplace / platform provider will be viewed as (a) buying and (b) selling the underlying goods and will, therefore, be required to collect and pay the VAT on relevant sales.

Digital marketplaces will be responsible for collecting and paying VAT in relation to the following cross-border B2C sales of goods they facilitate:

1. On the importation of goods from third countries by EU or non-EU sellers to EU consumers in consignments of an intrinsic value not exceeding €150 and/or
2. On intra-EU sales of goods by non-EU sellers to EU consumers of any value. This also applies to domestic supplies of goods.

The payment and declaration of VAT due will be made by the Electronic Interface through the One Stop Shop system for Electronic Interfaces.

The Import One Stop Shop (IOSS) will apply to supplies made via an Electronic Interface where this online market/platform facilities the importation of goods from outside the EU.

The deeming provision will not apply in situations where the taxable person only provides payment processing services, advertising or listing services, or redirecting/transferring services in circumstances where the customer is redirected to another online market/platform and the supply is concluded through that other electronic interface.

Online Markets/Platforms will also be required to retain complete documentation, in electronic format, in relation to their sellers’ transactions for the purposes VAT audits/inspections.

The application of this provision is mandatory for traders/taxable persons.  The use of the other schemes, however, will be optional.

5. The introduction of the Import One Stop Shop

There is currently a VAT exemption in relation to the importation (from outside the EU) of consignments valued at less than €22.  From 1^st July this exemption will be abolished and as a result, all goods imported into the EU will be liable to VAT.

The current customs duty exemption covering distance sales of goods imported from third countries or third territories to customers within the EU up to a value of €150 remains unchanged providing the trader declares and pays the VAT, at the time of the sale, using the Import One Stop-Shop.

For Non EU based suppliers there are two options:

1. They must either register for IOSS through an EU established intermediary or,
2. They can register for IOSS directly if the country where they are established has a mutual assistance agreement with the EU.

With regard to the appointment of an intermediary for the purposes of IOSS, please be aware that:

1. A taxable person cannot appoint more than one intermediary at the same time.
2. It is possible for an EU established supplier to appoint an intermediary to represent them.

The IOSS will facilitate traders registering and declaring import VAT due in all Member States through a single monthly return in the Member State in which they have registered for the Import One Stop Shop scheme.

Where the IOSS is used, the supplier will charge VAT to the customer at the time of the supply and, as a result, the goods will not be liable to VAT at the time of importation.  The VAT collected by the supplier will then be submitted through their monthly IOSS return.

The use of this scheme is not mandatory.

As the supplier/taxable person will only be required to register for IOSS in one Member State this will considerably reduce the administrative burden involved in accounting for VAT. After registration for IOSS, the supplier will be issued an IOSS identification number and this should expedite customs clearance.

If, however, the IOSS Scheme is not availed of, the supplier will be able to use another simplification procedure for the purposes of importing goods at a value not exceeding €150 whereby the import VAT may be collected by the postal services, courier company, shipping/customs agents, etc. from the customer, and the operator will then report and pay the VAT over to the relevant Revenue Authority on monthly basis.  This special arrangement will only apply where both conditions are met: (i) the IOSS has not been availed of and (ii) where the final destination of the goods is the Member State of importation.

The special arrangement allows for a deferred payment of VAT on the same basis.

In summary, the purpose of the IOSS is that suppliers who import goods into the EU can declare and pay the VAT due on those goods through the Import One Stop Shop in the member state where they have registered for the scheme.

The standard rate of Irish VAT is due to increase to 23% with effect from 1st March 2021.

The rate had been reduced to 21% for a six month period from 1st September 2020 to 28th February 2021.

Please be aware that the VAT rate reduction from 13.5% to 9% for certain goods and services, mainly within the tourism and hospitality sectors, will continue to apply until 31st December 2021.  Please follow link for more details:   https://www.revenue.ie/en/vat/vat-rates/what-are-vat-rates/second-reduced-rate-of-value-added-tax-vat.aspx

To prepare for the VAT rate change, there are a number of practical issues that taxpayers should consider as follows:

1. Update your Systems

2. Amend your Pricing structure if necessary.

3. Review and/or Revise your Contracts

4. Amend your Sales invoices

5. Don’t forget the Reverse Charge Mechanism especially for invoices dated pre 28th February but in circumstances where they’re received after 1st March 2021.

6. Credit notes – If you initially raised an invoice charging 21% VAT but the customer requests a credit note after the VAT rate has changed i.e. after 1st March 2021, please be aware that you may be required to apply the 21% rate after the VAT rate has returned to 23%.

7. If your business pays VAT to Revenue on a monthly direct debit basis, you should check to see if you’re required to increase this amount after 1st March 2021.

8. Consider how to account for payments on account which are received in advance of the VAT rate change.

9. Annual Return of Trading Details – Please be aware that the Annual Return of Trading Details deadline date has been extended from 23rd January to 10th March 2021 to take account of the rate change in 2020.