A roundup of the latest VAT news in Ireland Q1 2022

9% reduced VAT rate extension

Welcome business support news for the Hospitality Sector with the extension of the 9% reduced VAT rate into the year 2023.

With the announcement from the Minister of Finance of the further extension of the 9% reduced VAT rate in Ireland until 28 February 2023, the extension is envisaged to continue fiscal support for the sector which was severely impacted by public health restrictions put in place during the Covid19 pandemic.

This extension will cover the same goods and services as the original measure, restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, and hairdressing, as well as certain printed matter such as brochures, leaflets, programmes and catalogues.

Climate measures and the temporary VAT rate reduction to energy bills

In the face of significant global inflationary increases in the cost of electricity, gas and fuels and as a part of a compensatory subvention package, a temporary VAT rate reduction is being introduced. 

The VAT rate applicable to gas and electricity is being temporarily reduced from 13.5% to 9% will begin on 1 May and last until 31 October 2022.

The benefit of this reduction is seen in part to help offset the increase in the Carbon Tax levy.

This VAT rate reduction follows cuts in the excise duties on petrol and diesel in March 2022 that will last and be reviewed at the Budget 2023 later this year. In addition, there is a once-off €100 fuel allowance lump sum to social welfare recipients.

While these supports are needed and welcome, it will be interesting to see what further steps will be taken or extended later in the year when with the drop in weather temperature, heating usage necessarily increases for all particularly the vulnerable in society.

VAT Compensation Scheme 2022- Deadline reminder

The Value Added Tax (VAT) Compensation Scheme aims to reduce the VAT burden on charities and to partially compensate for VAT paid by the charity.

The scheme applies to VAT paid on expenditure on or after 1 January 2018. VAT paid in years prior to that cannot be claimed.

Charities can submit one claim per year, which should relate to VAT paid in the previous year only. 

Claims can only be submitted between 1 January and 30 June each year.

Claims made under this scheme are not dealt with on a first come, first served basis. 

The fund for the scheme will be capped at €5 million annually.

Charities are entitled to claim a refund of a proportion of their eligible VAT costs, based on their level of non-public funding. 

The total amount of claims in each year may exceed the capped amount. If this happens, any refunds due will be paid to charities on a pro-rata basis.

Deadline reminder – the claim relating to the calendar year 2021 needs to be prepared and submitted by Thursday 30^th June 2022

Debt Warehousing update

In March 2022, the Irish Tax Institute published a useful and important update* on the Debt Warehousing Scheme relating to information notices issued by the Revenue Commissioners which is a particularly useful briefing for businesses and their advisors.

The purpose of these information notices as published by Revenue is to provide business traders with a level of certainty regarding their participation in the Tax Debt Warehousing Scheme, outlining the timetable of next steps planned by Revenue and highlighting immediate actions to be taken by traders where relevant to ensure that they do not lose the benefits of the scheme.

The key messages of these notices include that: 

• Traders continue to observe their tax obligations and maintain their tax returns filings up to date
• Any outstanding tax returns should be completed and filed by 30^th April 2022 or the trader will lose the benefits of the Debt Warehousing Scheme. Therefore businesses/ traders should act immediately and check to ensure compliance.
• The Revenue should be contacted without delay in the event that difficulties are encountered and negotiate a solution that allows the business/ trader to continue to avail of the tax Warehousing Scheme.

Detail can be found at the Irish Tax Institute

*With acknowledgment to the Irish Tax Institute on the publication. 

VAT -Postponed Accounting e-brief update

The Revenue has recently issued an e-brief no. 109/22

This updated guidance sets out the conditions attached to the use of Postponed Accounting arrangements by accountable persons who import goods into the State. Postponed Accounting arrangements may be applied to all imports from all third countries including Great Britain (UK not including NI).

The key clarification being made in this update is that it is the consignee (importer) and not their representative (Customs Broker or freight agent) that is obliged to account for Postponed Accounting on their VAT3 return and the VAT RTD.

We have seen that the incorrect application of the use of postponed accounting has generated problems and increased audit risk scrutiny from the Revenue for clients. Therefore,  it is important that appropriate steps and advisory assistance is sought to ensure the prescribed reporting obligations are being adhered to. 

eBrief No. 109/22: VAT - Postponed Accounting

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars VAT team.