Our view on recent updates from Irish Revenue and EU Commission

Irish Revenue Updates

eBrief No. 068/19

Revenue eBrief No. 068/19 sets out the mandatory e-filing notification procedures for new VAT registrations which is part of Revenue’s strategy to digitalise the Irish tax business.

As stated in the Revenue eBrief, once a VAT registration is submitted and approved by Revenue, an “Advice of Registration” letter will be automatically issued to the taxpayers and to the agents on record. The contents in the notification letter would be tailored based on whether the taxpayers account for VAT on the invoice basis or the monies received basis.

Generally the normal method for accounting for VAT is the invoice basis. However taxpayers may also opt for the monies received basis where their annual turnover does not or is not likely to exceed €2 million or where at least 90% of their supplies are made to non VAT-registered customers. Appendix 1 and 2 of this Manual provide that regardless of the VAT accounting basis, taxpayers must quote their VAT numbers on invoices, settlement vouchers, customs declarations, etc. Taxpayers’ VAT3 returns and payments must also be made electronically using ROS by the 23rd day of the month following the end of each bi-monthly period. A monetary penalty may apply if the taxpayer does not use ROS to file the VAT returns and pay the VAT liabilities.

Appendix 3 of the Tax and Duty Manual provides for a list of specified returns and specified tax liabilities that must be paid and filed on ROS. These include Form VAT3, Annual Return of Trading Details, and Quarterly Return for VAT on e-services and the periodical VAT due for a taxpayer.

Under this Revenue eBrief, both invoice-based and monies-received based taxpayers are obliged to cancel their tax registration numbers where their trading activities have ceased in the State. Taxpayers may progress the cancellation either online via ROS or by completing Form TRCN1.

Revenue also state in the eBrief that a taxpayer who does not have the capacity may apply in writing to be excluded from the obligation to pay and file electronically. Revenue explain “capacity” to “mean sufficient access to the Internet, by which either or both a specified return or the payment of any specified liabilities may be made by electronic means and, in the case of an individual, also means not prevented by reason of age, or mental or physical infirmity from either or both making a specified return or paying any specified liabilities by electronic means”.

Deloitte has extensive experience in dealing with the electronic submission and cancellation of VAT & RCT registrations as well as offering cost effective and efficient indirect tax compliance services to clients in across numerous sector. Should you require any assistance please contact Alan Kilmartin.

eBrief No. 048/19

In March 2019 Irish Revenue issued an eBrief, No. 048/19, to announce updates to their VAT Tax and Duty Manual. The updates include new chapters on VAT treatment of activities of public bodies and VAT treatment of vouchers.

A new chapter provides Revenues’ view on the VAT treatment of activities that are carried out by public bodies, and other bodies governed by public law. The Revenue guidance states that to determine the appropriate taxable status of a public body, it is necessary to consider whether the public body ‘acts in its capacity as a public body’ when it carries out an activity.

If the public body is acting in its capacity as a public body, it would be deemed to be a non-taxable person and the particular activity would be outside the scope of VAT unless this would lead to significant distortion of competition. Revenue state that this distortion should be evaluated by reference to the particular activity, the actual competition and the real potential competition.

However, it should be noted that a public body would always deemed to be a taxable person in relation to carrying out activities listed in Schedule 6 in VATCA 2010. These activities include the provision of telecommunication services, transport of goods, port and airport services, passenger transport, organisation of trade fairs and exhibitions, warehousing and etc.

A new chapter on the VAT treatment of vouchers deals with instruments such as stamps, coupons, telephone cards, tokens and book tokens. Although the guidance does cover vouchers it must be noted that its does not cover the new voucher rules that were introduced by Council Directive (EU) 2016/1065. New rules and definitions apply to certain types of vouchers issued from 1 January 2019 read more about Single and Multi-Purpose Vouchers in our previous article on this topic, Vouchers – New VAT rules are looming.

The Revenue guidance provides that where the voucher is sold for the face value to a private customer, no VAT is due on the initial sale and instead, VAT is due on the redemption of the voucher. The trader who accepts the voucher for redemption would be liable for the VAT at the VAT rate that applies to the goods or services the trader provides when the voucher is redeemed. The Revenue eBrief also confirms that VAT is chargeable on the difference at the standard rate, currently at 23%, where a voucher is sold for a consideration exceeding the face value.

The Revenue eBrief also considers the VAT treatment of discounted vouchers used for goods. The guidance provides that where a supplier sells a voucher at a discounted price to a buyer and undertakes to accept the voucher in full or part payment of goods purchased by a customer who is not the buyer of the voucher, VAT is chargeable on the discounted amount rather than the full face value. Similar to the non-discounted vouchers, no VAT is due on the initial sale and instead, VAT is only due when the voucher is redeemed in exchange of goods. Revenue also states that businesses operating this scheme must maintain a proper audit trail to identify the original buyers and the discounted amounts.

The 2019 changes in the EU rules governing vouchers have affected many businesses imposing an increased compliance burden along with possible adverse cash-flow implications. Should you have any queries, please contact Richard McDaid or Conor Walsh.

eBrief No. 049/19

The Tax and Duty Manual on VRT Repayment Schemes and Procedures for Processing Repayment Claims has been updated to reflect changes introduced by Finance Act 2018. The changes have been made in section 2 of the VRT Manual and focus mainly on the cessation of Motor Vehicle Excise Duty relief to vehicle leasing businesses and schools of motoring.

Previously businesses involved in the leasing or hiring of vehicles and providing instruction in the driving of vehicles under section 134(7) of the Finance Act 1992 were entitled to a deduction of Motor Vehicle Excise Duty chargeable on all vehicles imported into Ireland. Following the introduction of section 38 of Finance Act 2018, with effect from 1 January 2019, claims for this relief will no longer be accepted for vehicles registered on or after that date. Claims for vehicles registered before that date had to be submitted and approved before 1 April 2019 to avail of the duty deduction.

VRT and VAT on transactions involving motor vehicles is a complex and technical matter and the Deloitte Indirect Tax team has considerable expertise dealing with VAT and VRT issues relating to motor vehicles. For any queries, please contact Jim Nolan.