Country-specific updates: Ireland

Deferred VAT accounting for imports

From 1 January 2021 sales of goods from Great Britain (but not Northern Ireland) will be treated as imports into Ireland. Import VAT will generally be due by the importer in Ireland.

The Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2020 (the Bill) is currently before the Irish Parliament, which contains the Irish domestic legal measures necessitated by Brexit. The measures contained in the Bill (section 62) provide for the continuation of deferred accounting for VAT on imports by VAT registered traders in the event of ‘no-deal’ Brexit. The effect of these measures is that VAT can be accounted for in the importer’s next following periodic VAT return (instead of becoming due from the date of the import).

Notably, the Irish Department of Finance has not publicly confirmed whether deferred VAT accounting will be available for importers in the event agreement is reached between the EU and the UK on post-Brexit trade.

Similar measures on deferred VAT accounting for imports exist under the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019 (section 56). But these measures have not been brought into force while the Brexit transition period is ongoing.

Changes to certain VAT rates

The Irish Government’s 2021 Budget (Finance Bill 2020) contains changes to the VAT rates that apply to certain transactions in the tourism and hospitality sectors. From 1 November 2020 until 31 December 2021 the reduced 9% VAT rate will apply to supplies of various services. The affected supplies include supplies of restaurant, catering and/or entertainment services and the provision of holiday and hotel accommodation. The reduced 9% rate will also apply to hairdressing services and the sale of certain printed matter such as brochures, maps and programmes. Before this change, the reduced 13.5% VAT rate applied to these kinds of transactions.

Additionally, Finance Bill 2020 proposes changes to the VAT rates applicable to certain supplies – including sales of specific types of sanitary products and candles and the supplies of medical equipment used by Ireland’s Health Service Executive (HSE) in connection with combatting Covid-19. Notably, these proposed changes were not announced publicly by the Department of Finance as part of Ireland’s 2021 Budget.

Earlier this year, as part of the Irish Government’s ‘July Stimulus’, legislation (section 12 Financial Provisions (Covid-19) (No. 2) Act 2020) was enacted to provide for a reduction in the standard VAT rate from 23% to 21%. This reduction is due to expire in March 2021. It is unclear at this stage whether this reduction will be renewed after that date.