Our view on recent updates from Irish Revenue and EU Commission
Indirect Tax Matters March 2020 Edition
- Revenue eBrief No. 195/19 - 25 November 2019
The Tax and Duty Manual VAT Repayment Offset has been created to explain how an option may be utilised to automatically offset VAT Repayment claims to a tax type and period selected by the customer from 25th November 2019.
- Revenue eBrief No. 197/19 – 3 December 2019
Review of Opinions/Confirmations
Tax and Duty Manual Part 37-00-41 has been updated to provide guidance to taxpayers who wish to continue to rely on an opinion or confirmation issued by Revenue in the period between 1 January and 31 December 2014, in respect of a transaction, period or part of a period, on or after 1 January 2020.
A taxpayer who wishes to continue to rely on such an opinion or confirmation is required to make an application for its renewal or extension on or before 31 March 2020.
- Revenue eBrief No. 204/19 – 5 December 2019
Vehicle Registration Tax Section 6 Appeals
Tax and Duty Manual Vehicle Registration Tax Section 6: VRT Appeals has been updated to clarify that, in exceptional cases, appeals may be accepted if sent after the normal two month deadline has passed. These exceptional cases will be considered by Revenue on a case-by-case basis.
- Revenue eBrief No. 205/19 - 6 December 2019
VAT treatment of Blood and Blood Plasma Products
The VAT Tax and Duty Manual has been updated to include new guidance setting out the VAT treatment of Blood and Blood Plasma Products which comes into effect on 01 January 2020.
This guidance sets out the VAT treatment of human blood, human blood plasma, pharmaceutical products derived from human blood plasma and recombinant products. It also highlights the change of VAT treatment of human blood plasma and pharmaceutical products derived from human blood plasma.
The Court of Justice of the European Union’s (CJEU) judgement in Case C-412/15 TMD held that human blood plasma intended to be used in the manufacturing of pharmaceutical products is subject to VAT. This VAT treatment takes effect from 01 January 2020.
Revenue previously treated pharmaceutical products derived from human blood plasma as exempt from VAT. From 01 January 2020, these products will be subject to VAT.
Auctioneers Margin Scheme
The guidance of the Auctioneers Margin Scheme has also been updated.
- Revenue eBrief No. 216/19 - 17 December 2019
Tax and Duty Manual has been updated to include details of Revenue’s new online application system for charities and sports bodies. This new application system is in place from 09 December 2019. The manual also summarises the different roles of the Charities Regulator and Revenue and outlines the various exemptions and tax obligations of charities.
- Revenue eBrief No. 220/19 - 20 December 2019
VAT treatment of food supplement products and certain other products
The reduced rate (13.5%) of VAT applies to all food supplement products for human oral consumption effective from 1 January 2020, following the enactment of Finance Bill 2019. This guidance sets out the VAT treatment of these food supplement products. It also sets out the VAT treatment of certain other products for human consumption (certain products classified as medicines, and foods for specific groups) and liniments, ointments and rubs made from food ingredients.
Substantive requirements for zero-rating intra-Community supplies
This guidance sets out the substantive requirements for the application of the zero rate of VAT to an intra-Community supply (ICS) of goods and the evidence required to be retained by the supplier of the goods relating to the transport of the goods. These new measures take effect from 1 January 2020.
VAT treatment of Call-off Stock Arrangements
This guidance sets out details of the VAT treatment of call-off stock arrangements. While goods can continue to be supplied under call-off stock arrangements under the provisions of section 23 of the Value-Added Tax Consolidation Act, 2010 until the 31st of December 2019, all goods supplied under call-off stock arrangements are specifically excluded from those provisions from the 1st of January 2020.
The guidance also sets out the details on the application of a simplification measure for call-off stock arrangements which must be applied from the 1st of January 2020. This measure provides for a simplified VAT treatment of goods transferred under call-off stock arrangements where certain prescribed conditions are met. The measures set out in the guidance do not apply to a transfer of goods to or from non-EU Member States.
The Chain Transactions rule
This guidance sets out new VAT rules for chain transactions that apply from 1 January 2020. A chain transaction is a series of successive supplies of the same goods where the goods supplied are subject to a single intra-Community transport between two Member States.
The new rules have been introduced to assign the intra-Community transport of the goods to one of the supplies in these types of chain transactions. Only the supplier who has been assigned the intra-Community transport can avail of the zero rate of VAT for intra-Community supplies of goods, subject to the normal rules.
Transfer of Business
In addition, the Transfer of Business chapter has been updated to reflect the changes that will occur on enactment of Finance Act 2019 with regard to deductibility.
This guidance sets out the VAT treatment of business assets disposed of by way of a transfer of a business.
These provisions, generally referred to as Transfer of Business relief (TOB), are aimed at reducing compliance costs for traders. The intention of the relief is to remove from the transferee the requirement to pay VAT on the acquisition of assets to which the relief applies, where he/she would have had an entitlement to deduct some or all of the VAT payable. The legislation provides that where assets are transferred in circumstances where TOB provisions apply it is deemed that no supply has taken place for the purposes of VAT.
Where the circumstances surrounding a transfer of assets are such that TOB provisions apply and VAT is not therefore chargeable on the transfer of those assets, the application of the provisions is mandatory.
Where a transfer of assets falls within TOB provisions, it is important to note that any VAT paid by a purchaser to a vendor in respect of that transfer will not be deductible as the transfer is deemed not to be a supply for VAT purposes.
This guidance applies to assets transferred on or after the date of publication, but where assets transferred on or after that date were subject to binding contractual arrangements put in place prior to that date, previous guidance will apply.
- Revenue eBrief No. 19/20 - 27th January 2020
Electronic Tax Clearance
Paragraph 21 of Tax & Duty Manual, Electronic Tax Clearance has been updated to clarify that, where tax clearance is required for a grant, an application must be submitted each year but that, in all other cases, a new application is required after four years.
- Revenue eBrief No. 21/20 - 28th January 2020
Charities VAT Compensation Scheme – Guidelines
Tax and Duty Manual Charities VAT Compensation Scheme – Guidelines for Charities has been updated to reflect revised guidance for submission of claims.
European Commission updates
Brexit: Ongoing movements of goods from a VAT & customs perspective
In order to avoid a hard border on the island of Ireland and maintain the integrity of the Single Market, the EU's VAT rules for goods will continue to apply in Northern Ireland.
HMRC will remain responsible for applying VAT legislation, including the collection of VAT, and the setting of VAT rates. The UK will keep revenues accruing from this tax. In addition, VAT exemptions and reduced rates which apply in Ireland may also be applied in Northern Ireland
After the end of the transition period, the EU rules will continue to apply for cross-border transactions that started before the transition period in terms of VAT rights and obligations for taxable persons, such as reporting obligations, payment and refund of VAT.
VAT payment data used to fight fraud in the e-commerce sector
The new rules have been agreed to assist Member States to counter e-commerce VAT fraud, estimated at around €5 billion a year in the EU. Anti-fraud experts in Member States will have access to VAT-relevant data held by payment intermediaries such as credit card and direct debit providers which facilitate more than 90% of all online purchases across the EU.
Payment service providers will be obliged to provide Member State authorities with certain payment data from cross-border sales, which will be available to anti-fraud specialists to access and analyse.
VAT exemption for supplies to Member State armed forces
The European Commission has introduced new rules which will make supplies to armed forces exempt from VAT and excise duties when these forces are deployed outside their own Member State and take part in a European defence effort.
The European Council reaches an agreement to simplify VAT exemption rules for SMEs
The Council reached a general approach to further simplify the VAT rules which apply to small and medium-sized businesses in order to reduce their administrative burden and compliance costs.
Currently, the VAT exemption rules only apply to domestic SMEs established in their own Member State. The agreement will extend a similar VAT exemption to small enterprises established in other Member States.
The new rules will ensure a uniform VAT exemption applying to businesses with a domestic turnover threshold of €85,000 in their own Member State. To obtain the exemption in another Member State the threshold is €100,000 of EU –wide turnover. Qualifying SMEs will be able to take advantage of further simplifications in dealing with VAT obligations such as registration and reporting. The new VAT scheme for SMEs should enter into force in January 2025.