VAT is usually charged on top of your usual sale price when you are selling to private consumers in Ireland. Your customer pays the VAT over to you and you are then responsible for reporting and paying this VAT to Revenue.
If you are selling goods to private consumers in other EU Member States, you must register for VAT if you exceed the VAT distance selling thresholds in that Member State.
For example, in Ireland the distance selling threshold for the sale of goods is €35,000, however, the UK has a threshold of £85,000.
You need to check the VAT rate and threshold for the sale of goods in each country you are selling to and you should also speak to an accountant in that country.
As always in VAT, there are exceptions to these rules, so we recommend speaking to a professional to determine and understand your personal situation.
Selling goods to other businesses (B2B) in Ireland and other EU countries
If you sell goods to other businesses in Ireland, you charge VAT on your sales and put it in your VAT Return to Revenue. All VAT you get from your customers must be paid to Revenue in a VAT Return – usually every two months (bi-monthly).
Selling goods to other businesses ( B2B ) within the European Union ( EU ) is also called “Intra-Community Supply (ICS)”. If your business customers have a VAT number and they are outside Ireland, you can apply a zero-rate (0% VAT) on that supply.
You can apply the zero rate of VAT if:
- The business customer is VAT registered in another EU Member State
- You have ( and keep ) your business customers’ VAT number (including country prefix)
- You quote your VAT number and the business customers’ VAT number on the sales invoice
- The goods are being dispatched or transported to another EU Member State; and
- The correct VIES Returns are made by you (an Intrastat Return may also be required depending on the volume of sales).
What is VIES?
VIES is short for VAT Information Exchange System. It is an EU system that allows a supplier to apply 0% (zero-rate of VAT) to the supply of goods. VIES is there to ensure the zero-rating is being used where allowed and not being incorrectly used. Information is shared between Irish and EU tax authorities to help find unreported movements of zero-rated goods between EU member states. If the web version of VIES is used, it is a way of checking VAT-identification numbers of businesses registered in the EU for cross border transactions on goods or services.
Businesses can check VAT numbers on the European Commission’s VIES VAT number validation website.
Selling goods to private consumers (B2C) outside the EU
If you sell goods to private consumers outside of the EU, you do not charge VAT.
However, you can still claim Purchases VAT on any related expenses for that sale.
Irish business owners can get VAT back through a VAT return to Revenue. If you need help with your VAT obligations, we can help.
Selling goods to businesses (B2B) outside the EU
If you sell Irish goods to businesses outside of the EU, you do not charge VAT. Therefore, it is also called zero-rated (0%).
There is no VIES system for non-EU businesses. It is your responsibility to make sure that there is enough evidence to prove that your customer is set up outside the EU and is a business. You also need proof that the goods have actually left the country e.g. proof of postage / courier bills.
How to charge VAT when selling services from an Irish company / business
When your business sells services, there are “place of supply” rules that apply.
There are 2 main rules to decide where the sale took place depending on whether the recipient is a business or a private consumer.
- For supplies of business to consumer services (B2C), the place of supply is (generally) the place where the supplier is established.
- For supplies of business to business services (B2B), the place of supply is (generally) the place where the business receiving the services is established.
There are many exceptions to the general place of supply rules and care must be taken in this area.
Selling services to private consumers (B2C) in Ireland and other EU countries
If your business sells services to private consumers in Ireland and the EU, the place of supply is (generally) the place where the supplier is established. There are many exceptions to this rule so always consult with your accountant.
This means that you (the business owner) will account for VAT on any services that are being sold to private consumers in Ireland and other EU member states. VAT would be included in your invoice and therefore the consumer will pay the VAT over to you. You will put that VAT in your VAT Returns and pay the VAT charge to Revenue.
However, it’s you should know that if you supply telecommunications, broadcasting and e-services (“TBE”) to private consumers, the place of supply is where the consumer lives. Instead of having to register, charge and account for VAT in each EU Member State in which you make B2C supply of TBE services, a system called VAT MOSS has been introduced.
What is VAT MOSS?
VAT MOSS is short for Value Added Tax Mini-One-Stop-Shop. It reduces the paperwork for businesses that supply TBE to non-taxable persons, i.e to private individuals / households.
You don’t have to register for VAT MOSS but if you don’t use VAT MOSS you will have to register, charge and account for VAT in each EU Member State you supply B2C TBE services to.
We recommend you speak to an accountant if you think you might be eligible for VAT MOSS registration. You can make sure your business is registered for the correct taxes.
Selling services to other businesses (B2B) in Ireland and other EU countries
If you supply services to other businesses in the EU, the reverse charge will normally apply so the customer will account for the VAT on the purchase in their VAT return.
What is the reverse charge?
The reason for the reverse charge is to have VAT charged in the Member State where the goods / services are used (i.e. where the customer is based) rather than the Member State of the business selling the goods or services. It only applies in B2B transactions.
The reverse charge means the responsibility to report the VAT to the tax authorities falls to the business using the goods or services, and the rate of VAT in their home country applies. The VAT is reported in the customer’s local VAT return and does not appear in the supplier’s VAT return.
For the reverse charge to apply certain criteria must be met.
An invoice must be issued to the business customer indicating that “reverse charge will apply” and the customer’s VAT number must be quoted on the invoice.
There are many different rules that apply to reverse charge so you need to learn them from the Revenue.ie website or take professional advice.
Selling services to private consumers (B2C) outside the EU
As a business you can generally supply services to non-EU private customers free of VAT by providing proof that the customer is based outside of the EU. Businesses will need to obtain verified information, such as credit card pre-authorisation that can verify the address associated with the card number, to supply services to consumers (B2C) without VAT.
Selling services to other businesses (B2B) outside the EU
If you supply services to another business outside of the EU, no Irish VAT is charged. You need to prove that the customer is a taxable person. This proof can be a VAT number or similar number which is used to identify the business outside of the EU.
Receipt of B2B services from outside of Ireland
If you buy services from outside of Ireland, from either another EU Member State or a non-EU country, the reverse charge rule also applies. The aim, again, is for VAT to be accounted for in the home country of the customer, in this case Ireland.
As owner, the you have to account for VAT on receipt of these services, under the reverse charge. You must account for this VAT in your Irish VAT return at the correct rate of VAT in Ireland.
You will treat it as if you made the supply to yourself and charge yourself the VAT on the supply. This VAT is then owed to Revenue. If you are entitled to a deduction you may claim a simultaneous deduction for the cost of the service in the same VAT return. The result often leaves the taxpayer in a VAT neutral position. However, as always, there are exceptions to this rule, particularly in cases where the taxpayer is not entitled to recover all of the VAT they incur.