The Minister for Finance Jack Chambers published his first Budget today announcing a number of changes to our corporate tax regime. A raft of tax measures and policies will be introduced to support Irish start-ups, small and medium-sized enterprises (SMEs) and multinational businesses. Budget 2025 provided for a total budget package of €10.5b
Our focus in this article is purely on Business Taxes under Capital Gains Tax, Corporation Tax, VAT and Employer/Employee Taxes.
SMALL BENEFIT EXEMPTION
BENFIT-IN-KIND
Retirement Relief
Retirement Relief (CGT) supports the cost effective / tax efficient transfer of businesses and farms from one generation to the next.
Finance Act 2023 introduced a number of amendments to the Retirement Relief regime which included:
These changes were to come into effect on 1st January 2025.
Budget 2025 will retain the increased upper age limit. It also introduced a clawback period of twelve years on the Relief.
This means that any tax arising due to the cap of €10 million will be abated provided the assets are retained for twelve years.
In other words, the €10 million cap, due to be introduced on 1st January 2025, will only apply in circumstances where the child disposes of the assets within twelve years.
Angel Investor Relief
Angel Investor Relief, introduced in Budget 2024, was aimed at encouraging business angel investment in innovative start-ups.
Finance Act 2023 introduced a reduction on this rate for angel investors, bringing it down from 33% to 16% or 18%.
Budget 2025 provides Capital Gains Tax Relief for a third party individual who takes a significant minority shareholding (i.e. between 5% and 49% of the ordinary issued share capital of the company) for a period of at least three years, in a certified innovative start-up small and medium enterprise (SME) company which is less than seven years old. The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €20,000 or €10,000 if acquiring between 5% and 49% of the ordinary issued share capital of the company.
Qualifying investors will be able to avail of an effective reduced rate of CGT of 16%, or 18% if through a partnership, on a gain up to twice the value of their initial investment.
There was previously a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply. Budget 2025 has increased this limit to lifetime gains of up to €10 million.
Therefore, the amount on which the reduced CGT rates of 16% or 18% will apply is the lowest of the following:
The following will be extended for a further two years until 31st December 2025:
In addition, the EII limit on the amount that an investor can claim relief on will be doubled i.e. increasing from €500,000 to €1,000,000.
It is proposed to increase the SURE relief available to a maximum of €140,000 per year or a total of €980,000 over seven years.
Research and Development (R&D) Tax Credit
As you’re aware, the existing Research and Development (R&D) Tax Credit provides a 30% tax credit for all qualifying R&D expenditure.
The first year payment threshold will now increase from €50,000 to €75,000.
Companies with claims of between €75,000 and €150,000 will benefit from a €25,000 increase in the first instalment of their claim.
Companies with claims of in excess of €150,000 will continue to receive a first instalment amount based on 50% of the Research & Development Tax Credit claim.
Two new Audio-visual incentives
A new tax credit will be introduced for the unscripted film production sector.
The relief will take the form of a 20% Corporation Tax Credit for certain production expenditure up to a maximum limit of €15 million per project.
The commencement will be subject to State Aid approval from the European Commission.
A cultural test will be introduced.
The second incentive is an 8% uplift referred to as the “Scéal Uplift”.
This involves an uplift of 8% to the existing film credit in respect of certain feature film productions.
It will be applied to the existing film credit and will result in a tax credit rate of 40% for projects with a maximum qualifying expenditure of up to €20 million.
This incentive is for small to medium budget productions under the Section 481 film tax credit.
As with the Tax Credit for Unscripted Productions, the Scéal Uplift is subject to State Aid approval.
A new Participation exemption for foreign sourced dividends from subsidiaries in EU/EEA and tax treaty jurisdictions will be introduced with effect from 1st January 2025. The aim is to simplify existing Double Taxation Relief provisions.
Currently, Ireland operates a worldwide corporate tax regime. This means that all the profits (both domestic and foreign) earned by an Irish resident company are subject to Irish tax with Relief for any foreign taxes deducted under, a ‘tax and credit’ regime.
Under the new rules, a company will have the option of either (a) claiming the participation exemption or (b) continuing to use existing tax-and-credit relief.
To do this, an election will have to be made in the company’s annual corporation tax return. It will apply to all qualifying dividends in that particular period.
For non-qualifying jurisdictions, the existing method of claiming double taxation relief should continue.
The new participation exemption for foreign source dividends will come into effect from 1st January 2025.
For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
Understand the Tax measures of Budget 2025 which relate to property transactions, at a glance.
Today, the Minister for Finance and the Minister for Public Expenditure, NDP Delivery and Reform, announced the details of Budget 2025.
As anticipated, Budget 2025 introduced several tax measures in relation to property.
This article will focus on the property related tax measures introduced by Budget 2025, under Income Tax/Personal Tax, Residential Zoned Land Tax (RZLT), Stamp Duty, Vacant Homes Tax (VHT) and Value Added Tax (VAT).
A new 6% rate of Stamp Duty has been introduced on residential properties from 2nd October 2024.
The stamp duty rates for residential properties will now be as follows:
The existing stamp duty rates will continue to apply to instruments executed before 1st January 2025 on foot of a binding contract in place before 2nd October 2024.
For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
Today, 10th October 2023, the Minister for Finance, Michael McGrath and Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe presented the 2024 Budget. This article will summarise the main points under Personal Tax, Business Tax, VAT, Capital Gains Tax, Property Taxes, etc.
Budget 2024 tax measures feature a range of supports for individual and business taxpayers under the following headings:
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
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:
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
Today, Minister for Finance, Paschal Donohoe T.D., and Minister for Public Expenditure and Reform, Michael McGrath T.D. presented Budget 2023. We have summarised the key measures included in this “cost of living” Budget including Ireland’s headline Corporate Tax rate remaining unchanged at 12½%. A number of welcome personal tax and global mobility employment tax measures to benefit Irish employees and international assignees include an extension to the Special Assignee Relief Programme (SARP), to the Key Employee Engagement Programme (KEEP) and the Foreign Earnings Deduction (FED). The key Corporate Tax measures include amendments to the R&D tax credit, the extension of the KDB as well as the extension of the film tax credit, subject to a commencement order.
In Budget 2023, Minister Donohoe announced an extension to a number of existing personal tax reliefs including:
Key measures included in Budget 2023:
The main corporate tax measures include amendments to the Research & Development tax credit and extensions to the Knowledge Development Box and film tax credit regimes:
Help-to-Buy Scheme
The scheme will continue at current rates for another two years and will expire on 31st 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.
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 28th 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 28th 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 1st January 2023.
Zero-rated supplies
From 1st January 2023 VAT on newspapers, including digital editions will be reduced from 9% to 0%.
For further information, please click: https://www.gov.ie/en/publication/4de03-your-guide-to-budget-2023/
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Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
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
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
The VAT reclaim provisions contained in s74(4) VATCA 2010 have been abolished with effect from 1st January 2022.
From 1st 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:
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:
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
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
The Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 was published today. The provisions contained in the Bill include amendments to existing supports which were announced in the Economic Recovery Plan in addition to the introduction of the Business Resumption Support Scheme. These tax relief measures income Income Tax, Business/Corporation Tax, Employer and Payroll Taxes and VAT.
Section 6 of the Bill amends section 46 VATCA 2010 to provide for the extension of the reduced 9% VAT rate until 31st August 2022 in relation to the following services:
In summary, the reduced 9% VAT rate for the tourism sector has been extended from 31st December 2021 to 31st August 2022.
The Employment Wage Subsidy Scheme (EWSS) is a scheme that subsidises the cost of getting employees back to work.
The extension of the scheme should provide reassurance to businesses affected by the pandemic and enable them to plan for the months ahead.
Section 2 of the Bill amends the Employment Wage Subsidy Scheme (Section 28B of the Emergency Measures in the Public Interest (Covid-19) (No.2) Act 2020) to provide for the following changes:
This employer/payroll tax scheme requires that employers have valid tax clearance to enter the EWSS and that they maintain this tax clearance for the duration of the scheme.
The COVID-19 Restrictions Support Scheme (CRSS) was introduced by the Finance Act 2020.
It provided support for businesses which had to temporarily cease as a result of public health guidelines.
At such time as the affected businesses are allowed to re-open, those claimants will have to exit this scheme.
As some of those businesses will remain financially affected, the new measures introduced in the Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 published today will extend the scheme. In addition, there will be an enhanced re-start payment for businesses exiting the scheme equal to up to three weeks at double rate of payment, subject to a €10,000 cap.
Sections 3 and 4 of the Bill amend the Covid Restrictions Support Scheme (CRSS) and provide for the extension of the specified period until 30th September 2021.
Section 4 of the Bill provides for the enhanced restart week payment scheme. The level of payment a business may claim on reopening, following the restrictions, will depend on the actual date that business reopens.
Please be aware:
Section 5 of the Bill includes a new section, section 485A TCA 1997, which makes provision for a new Business Resumption Support Scheme (BRSS)
The main features of the scheme are as follows:
Section 13 of the Bill gives statutory effect to the Financial Resolution that was passed on 19th May 2021 and inserts section 31E in the SDCA 1999, thereby imposing a 10% stamp duty rate on the acquisition of certain residential properties (houses and duplexes but excluding apartments) where an aggregate of ten or more units is acquired during a twelve month period by a single corporate entity or individual.
Section 14 of the Bill introduces a provision which provides for an exemption from the new 10% rate of stamp duty in situations where the residential units are leased to local authorities for certain social housing purposes.
Section 7 of the the Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 inserts a new section 28D into the Emergency Measures in the Public Interest (Covid-19) Act 2020 which provides for the warehousing of EWSS overpayments received by employers.
Sections 8, 9 ,10, 11 and 12 of the Bill give effect to the extension of the Debt Warehousing Scheme for refunds of Temporary Wage Subsidy Scheme (TWSS) payments, Employer PAYE liabilities, Income Tax, VAT and PRSI:
This scheme will have three periods:
In circumstances where an employer does not meet the conditions for debt warehousing then (i) the zero interest and (ii) reduced interest rates will no longer apply. Instead the 8% rate will be imposed.
In summary, the extension of the Debt Warehousing Scheme relates to refunds of Temporary Wage Subsidy Scheme (TWSS) payments, PAYE, Income Tax, VAT and PRSI.
For full and complete information, please follow the link: https://data.oireachtas.ie/ie/oireachtas/bill/2021/89/eng/initiated/b8921d.pdf
lease be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
From 1st July 2021 there will be major changes including:
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 1st 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 1st 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 1st 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 1st 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 1st 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:
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 1st 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:
With regard to the appointment of an intermediary for the purposes of IOSS, please be aware that:
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.