Our view on recent updates from Irish Revenue and EU Commission

• eBrief, No. 218/18

At the end of December 2018 Irish Revenue issued an eBrief, No. 218/18, to announce updates to VAT Tax and Duty Manual which can be accessed here. The updates can be classified into three distinctive categories (i.e. new guidance, reintroduced guidance and updated guidance) and include following:

1. New Guidance

The VAT treatment of rollators – the guidance provides an explanation of what a rollator is and clarifies the VAT rate applicable to the device itself and to the parts or accessories for same. A ‘rollator’ can be described as a walking frame with wheels. In short, although not explicitly listed as a medical appliance liable to the zero rate of VAT under paragraph 11 of Schedule 2 VAT Consolidation Act 2010, Revenue have clarified that from 1 March 2019 they will accept the application of the zero rate of VAT to rollators. Furthermore, parts or accessories for use solely or principally with rollators can also avail of the same VAT treatment.

The VAT treatment of food supplements and certain other substances for human consumption – the updated guidance removes reference to food supplements in light of the introduction of a separate section into the tax and duty manual that deals specifically with supplements and certain other substances for human consumption, Revenue have delayed implementing any changes to the current treatment until 1st November 2019. It also removes reference to cold food supplied in a take-away scenario and an option to apply to Revenue to have such take-away sales treated, by concession, as a separate activity to the catering business liable to zero-rate of VAT.

The VAT treatment of single-purpose and multi-purpose vouchers – the guidance sets out the new rules applicable to certain types of vouchers arising from Council Directive (EU) 2016/1065 of 27th June 2016. It provides an explanation of what is (and is not) considered to be a voucher under the new rules, distinguishes between two separate categories of vouchers (i.e. single-purpose or ‘SP’ and multi-purpose or ‘MP’) and the VAT treatment applicable to same and addresses the circumstances where vouchers are sold at a discount. In summary, the vouchers are considered SP if at the time of issue the place of supply and the VAT due on the supply of the goods/services to which the voucher relates are known and where the underlying supplies attract the same rate of VAT. Any other vouchers (as defined) that do not fall within the category of SP voucher are automatically considered MP. In general terms, the difference in the VAT treatment of the two distinct categories of vouchers is as follows:

• VAT on SP vouchers is due upon issue based on the sum actually received (regardless of the face value) and no VAT is then due on the actual redemption;
• VAT on MP vouchers is only chargeable on redemption in respect of the underlying goods/services supplied.

The new guidance came into effect from 1 January 2019 and applies to vouchers issued on or after this date.

2. Reintroduced guidance

The pharmacists scheme for VAT, The VAT treatment of staff canteen services, and The VAT treatment of opticians – the existing guidance on the VAT treatment applicable to these three separate areas has been incorporated within the VAT Tax and Duty Manual to make same easily accessible at a single location.

3. Updated guidance

The VAT treatment of Personal Contract Plans (PCP) – the updated guidance inserts an additional paragraph to assist PCP providers with the determination of whether the PCP should be treated as a supply of goods or a supply of service at the outset of the agreement. This is done by predicting the economically rational choice that would be made by the consumer at the term-end (i.e. to purchase or not to purchase the vehicle) with reference to a guaranteed minimum future value (GMFV) and the predicted market value of the vehicle at the end of the term. The guidance suggests that, when it comes to a PCP scenario, where the GMFV is clearly lower than the predicted market value, the economically rational choice will be for the consumer to either take title or trade-in. While if the GMFV is clearly in excess of the predicted market value then the economically rational choice for the consumer may be to return the vehicle.

VAT on food and drink - The updated guidance of February 2019 postpones the implementation date for the removal of zero rating for certain food supplements including vitamins, minerals and fish oils. It removes reference to cold food supplied in a take-away scenario and an option to apply to Revenue to have such take-away sales treated, by concession, as a separate activity to the catering business liable to zero-rate of VAT.

• eBrief, No. 219/18

Revenue also issued a second eBrief (No. 219/18) on 27 December 2018 which further updates the VAT Tax and Duty Manual by including a manual for charities on a VAT compensation scheme in respect of VAT paid on qualifying expenditure on or after 1 January 2018. The claims for compensation under this scheme can be submitted to Revenue from 1 January 2019 and the new manual provides important guidance on fundamentals of the scheme such as eligibility criteria and the application process. The eBrief No. 219/18 can be accessed here, see also our previous article on the refund scheme for charities.

• eBrief, No. 012/19

At the end of January 2019 Irish Revenue issued eBrief No. 012/19 on individual tax rulings issued to taxpayers which updates their Tax and Duty Manual Part 37-00-41, see Review of Opinions/Confirmations.

Revenue rulings are issued to taxpayers concerning particular matters which are complex in nature and on which guidance is not readily available or where there is uncertainty about the tax rules. It essentially delivers Revenue’s interpretation of the tax law in the context of a particular situation or transaction, for example, in the context of VAT, the determination of the correct VAT rate applicable to a particular food product on the basis of the particular ingredients used to manufacture same.

Historically Revenue did not place an expiry date on a ruling and it remained valid unless there was a change in law. Current policy restricts the validity of all rulings issued by them to taxpayers to five years or such shorter period specified when the opinion is issued by them. As such, all opinions issued by Revenue must be reviewed by Revenue every five years (or in a lesser period if specified), and can no longer be relied upon in the absence of such a review. It is a taxpayer’s obligation to monitor any opinions issued to them and to approach Revenue for renewal of the ruling on expiration of the five year validity period.

EBrief No. 012/19 reminds taxpayers to apply to Revenue before 29 March 2019 for a renewal of rulings issued during 2013 (i.e. January to December) should they wish to continue to rely on same.

• eBrief, No. 019/19

Updates on Vehicle Registrations Tax (VRT)

Another Revenue eBrief (No. 019/19) updates the VRT manual by inserting changes under the ‘VRT Registration Procedures and Processes’ heading.

The changes are reflected in sections 1.2.3 and 1.6.1 of the VRT Manual. These incorporate the insertion of a table displaying the revised Category A rates of VRT for diesel fuelled vehicles as introduced by Budget 2019 (see Global Indirect Tax News publication for October 2018 for more details) and the revision of the definition of CO2 emissions in light of the replacement of the New European Drive Cycle (NEDC) measurement by the World Harmonised Light Vehicle Testing Procedure (WLTP) and the introduction of a conversion tool known as C02MPAS to aid in deriving an NEDC figure from a WLTP figure in the transition period.

In addition, on 6 February 2019 Revenue acknowledged a withdrawal of the Certificate of Permanent Export (CPE) from circulation by the UK authorities. This was used as proof of foreign registration when presenting a used vehicle imported from the UK for registration in Ireland and will continue to be accepted where it is presented. However, the standard V5 registration certificate will be used going forward which can only be obtained by persons resident in the UK.