Value Added Tax

Introduction

Value Added Tax (VAT) is a tax charged on the sale of goods or services and is usually included in the price of most products and services.

If you order or bring goods into Ireland from outside the European Union (EU), you may be charged VAT when the goods arrive into Ireland.

How VAT is charged

VAT is a tax on consumer spending, so everyone who pays for goods and services pays VAT. It is built into the cost of many commonly consumed items such as clothing and petrol, so you don’t see what percentage of VAT you are paying. However, when you are buying some items or services, such as electricity and professional services, you may see the amount of VAT and the rate at which you are being charged on your bill.

VAT is charged at every stage of sale where the cost of an item is increased.

The current standard rate of VAT is 23%.

Example

A manufacturer sells a television to a wholesaler for €100 and charges him VAT on that amount at 23%. Therefore, the wholesaler pays €123 for the television. The manufacturer then pays the VAT of €23 to the government.

The wholesaler goes on to sell the television to a retailer for €200. He adds on VAT at 23%, so the retailer pays a total of €246. The wholesaler must pay the government the VAT of €46, but he can reclaim the €23 VAT he has already paid to the manufacturer, leaving €23, which he pays to the government.

When the retailer comes to sell the television to a consumer, he must also add on VAT to his selling price. He sells the television for €300, plus VAT at 23%, making a selling price of €369 for the consumer. The retailer must pay the VAT to the government but he can claim back the €46 VAT that he paid to the wholesaler, leaving €23 for the government.

The government has now received 23% on the price paid for the television by the consumer (€69). The retailer, wholesaler and manufacturer only paid the amount of VAT they charged to the next group down the line.

VAT on imports

This section only deals with VAT for consumers who buy goods for personal use.

In general, you have to pay VAT and import duty on any goods you are bringing into Ireland from outside the European Union (EU). This includes goods purchased online and by mail order. You will have to pay VAT at the same rate as applies in Ireland for similar goods.

Within the EU, VAT is usually paid in the member state you purchased the goods, however, there are some exceptions - see below.

If you buy online

From outside the EU

From 1 July 2021, the VAT exemption on goods up to a value of €22 from outside the EU no longer applies. All goods arriving into Ireland from non-EU countries are subject to VAT.

Some online retailers are registered with the Import One Stop Shop (IOSS) so that VAT can be included in the price you pay for the goods. Before you make a purchase, check whether the advertised price includes tax and duty costs.

Customs duty is charged on goods with a value over €150.

Excise Duty is payable on alcohol and tobacco products and is separate from Customs Duty.

Revenue has a guide to buying goods from outside the EU for personal use including information on how to calculate what you owe in duties and taxes.

From another EU Member State

If you buy goods online or by mail from another EU member state you may pay VAT at the rate that applies in Ireland. However, if the supplier that you are buying the goods from has not exceeded the Distance Sales Threshold in Ireland then you will pay VAT at the rate that would apply in the country of purchase. You will usually be told the amount of VAT payable at checkout.

Excisable products (for example, alcohol, tobacco and oil) purchased within the EU via the internet or by mail are subject to excise duty and VAT.

Travelling with your purchases

From outside the EU

You can buy and bring your goods (other than tobacco and alcohol products) from a non-EU State into Ireland without paying any taxes, if their value is no more than:

  • €430 if you are aged over 15
  • €215 if you are aged under 15

You will have to pay VAT and customs duty on anything over these amounts.

If you bring in an item worth more than the €430 or €215 limit, you must pay import charges on the full value. Revenue has information if you arriving in Ireland from countries outside the EU.

From another EU Member State

There are no limits on what you can buy and take with you when you travel between EU countries, as long as the products you bought are for your own personal use and not for resale.

VAT is included in the price of the product in the EU member state and no further payment of taxes including VAT can be charged here in Ireland. The exception to this is where you are importing a vehicle from the EU.

Special rules apply in the case of goods subject to excise duty, such as alcohol and tobacco products. Revenue has published information if you are arriving in Ireland from the EU.

Gifts from outside the EU

You can receive a gift from outside the EU up to the value of €45 without paying import charges. However, the gift must be correctly declared. More information is available in Revenue’s guide to relief available for imports from non-EU countries.

VAT on residential property

If you:

  • Buy a new house from a builder or developer, you will be charged VAT at 13.5%
  • Buy or sell an ‘old’ or existing property, you do not have to pay VAT
  • Buy a site for a house from a landowner, you do not have to pay VAT unless you have an agreement with both the landowner and a builder to develop the site

If you are a landlord, you cannot charge VAT on rent from residential property.

If you paid VAT on your house (because you bought it from a developer or builder) you only have to pay stamp duty on the base price of the house – before the VAT was added. So, for example, if you paid €227,000 (including VAT) for your new house, this is made up of the base price of €200,000 plus 13.5% VAT (€27,000) and you only pay stamp duty on the base price of €200,000.

Rates

VAT is charged at different rates for various goods and services. Revenue has information on the different rates of VAT that apply. Some examples are included below.

23% is the standard rate of VAT. All goods and services that do not fall into the reduced rate categories are charged at this rate. They include alcohol, audio-visual equipment, car parts and accessories, CDs, computers, consultancy services, cosmetics, detergents, diesel, fridges, furniture and furnishings, hardware, jewellery, lawnmowers, machinery, medicines (non-oral), office equipment, pet food, petrol, paper, tobacco, toys, tools, washing machines, bottled water.

13.5% is a reduced rate of VAT for items including fuel (coal, heating oil, gas), electricity, vet fees, building and building services, agricultural contracting services, short-term car hire, cleaning and maintenance services.

9% is a special reduced rate for newspapers and sporting facilities. This also includes e-books and electronically supplied newspapers. The VAT rate for the hospitality and tourism sector decreased from 13.5% to 9% from 1 November 2020 to 31 December 2021. This applies to various entertainment services such as admission to cinemas, theatres, museums, fairgrounds and amusement parks. VAT at 9% also applies to hairdressing and certain printed materials such as brochures, maps and programmes.

4.8% is a reduced rate of VAT specifically for agriculture. It applies to livestock (excluding chickens), greyhounds and the hire of horses.

0% (Zero) VAT rating includes all exports, tea, coffee, milk, bread, books, children’s clothes and shoes, oral medicine for humans and animals, vegetable seeds and fruit trees, fertilisers, large animal feed, disability aids such as wheelchairs, crutches and hearing aids.

Exempt from VAT

You do not have to pay any VAT on financial, medical or educational services. You may also not pay VAT for live theatrical and musical performances (except those where food or drink is served during all or part of the performance).

Difference between exemption and zero-rating

If a business person supplies taxable goods or services, including zero-rated ones, they can claim VAT back from the government on their taxable business purchases. However, if someone only supplies exempt goods or services, they cannot reclaim VAT.

Claiming back VAT

People not registered for VAT
Under certain circumstances, people can claim back VAT. People with disabilities can claim a VAT refund on certain aids and appliances.

People registered for VAT
A business person must register for VAT to fulfil tax obligations to the government. Registering for VAT also allows a business to reclaim VAT on purchases.

Page edited: 14 July 2021