Standard Irish VAT rate is due to increase to 23% from 1st March 2021

Irish VAT Rates. Return of Trading Details. Tax and Accounting Services. Irish and EU VAT. Reverse Charge Mechanism

As you’re aware, the standard VAT rate was temporarily reduced, as one of the COVID measures, from 23% to 21% for the six month period between 1st September 2020 and 28th February 2021.  The standard rate of Irish VAT is due to return to the 23% rate with effect from 1st March 2021.  This is particularly important to remember for invoicing and when completing your Return of Trading Details.

Please be aware that the VAT rate reduction from 13.5% to 9% for certain goods and services, mainly within the tourism and hospitality sectors, will continue to apply until 31st December 2021.  Please follow link for more details:   https://www.revenue.ie/en/vat/vat-rates/what-are-vat-rates/second-reduced-rate-of-value-added-tax-vat.aspx

To prepare for the VAT rate change, there are a number of practical issues that taxpayers should consider as follows:

1. Update your Systems

2. Amend your Pricing structure if necessary.

3. Review and/or Revise your Contracts

4. Amend your Sales Invoices

5. Don’t forget the Reverse Charge Mechanism especially for invoices dated pre 28th February but in circumstances where they’re received after 1st March 2021.

6. Credit notes – If you initially raised an invoice charging 21% VAT but the customer requests a credit note after the VAT rate has changed i.e. after 1st March 2021, please be aware that you may be required to apply the 21% rate after the VAT rate has returned to 23%.

7. If your business pays VAT to Revenue on a monthly direct debit basis, you should check to see if you’re required to increase this amount after 1st March 2021.

8. Consider how to account for payments on account which are received in advance of the rate change.

9. Annual Return of Trading Details – Please be aware that the Annual Return of Trading Details deadline date has been extended from 23rd January to 10th March 2021 to take account of the rate change in 2020.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.