VAT update January 2025

Update on Intrastat reporting obligations and VAT changes

Changes to Intrastat reporting thresholds (effective 1 January 2025)

Starting from 1 January 2025, the annual thresholds for Intrastat reporting will increase as follows:

• Arrivals (Intra-Community imports): Raised from €500,000 to €750,000 per annum.
• Dispatches (Intra-Community exports): Raised from €635,000 to €750,000 per annum.

 Businesses involved in intra-community trade should review their reporting obligations to ensure compliance with these updated thresholds.

Changes to VAT rates (effective 1 January 2025)

• Supply and installation of heat pump systems:
  The VAT rate for the supply and installation of heat pump systems will be reduced to 9%.

Businesses and consumers should note this reduction when planning installations or issuing invoices.

Update: VAT treatment of stock exchange fees

Revenue eBrief No. 299/24, published on 5 December 2024, provides guidance on the VAT treatment of stock exchange fees.

The guidance summarises the definition of key fees associated with Stock Exchange trading in Ireland and their VAT treatment.

It is a useful guide and listing reference when considering the applicability and VAT reporting obligations. 

Update: VAT treatment of factoring and invoice discounting

Updated guidance sets out the VAT treatment for debt factoring and invoice discounting, including:

• Definitions of debt factoring and invoice discounting.
• Revenue's interpretation of debt factoring, including the distinctions between factoring with recourse and without recourse.
• VAT treatment of ancillary services, with an appendix listing VAT treatment of specific fees charged by financiers.

Additionally, the guidance addresses the entitlement to deduct VAT costs incurred during taxable activities, explaining:

• Definitions of qualifying activities.
• Entitlement to recover VAT on general overheads associated with both taxable and exempt activities. 

Update: VAT and solicitors services

A sectoral audit of solicitors led to the introduction of a Memorandum of Understanding between the Revenue Commissioners and the Law Society of Ireland. This is referenced in the Tax and Duty Manual and provides guidance on:

• VAT registration obligations.
• Applicable VAT rates and the taxable amount (including outlays).
• Interaction with Professional Services Withholding Tax (PSWT).

Key highlights include:

• A detailed listing of outlays not liable to VAT and expenses regarded as part of a solicitor's fee.
• VAT treatment of legal services provided by solicitors to banks and other lenders.
  • When solicitors are engaged by lenders for loan-related services, the VAT invoice and payment obligations rest with the lender, not the borrower.
  • Solicitors cannot issue VAT invoices to borrowers in these cases.

Professional Services Withholding Tax (PSWT) and VAT

Updated guidance also addresses the relationship between PSWT and VAT:

• For VAT purposes, PSWT withheld from payments is treated as if received by the solicitor.
• VAT is calculated on the full invoice amount, not the net amount received.
• The 20% PSWT deduction applies to the VAT-exclusive amount of the bill for legal services.

In addition, there was also change to the flat rate farmer provisions that reflect changes introduced in the Finance Act and the VAT treatment of food and drink supplied by wholesalers and retailers.

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 our VAT team.