Value Added Tax
After Income Tax, VAT represents the second largest source of tax revenue for the Irish State, amounting to almost €10.7 billion in 2004. There is no understating the importance of VAT to the Irish government and hence the importance of collection and administration.
VAT is an EU-wide tax, being operated with only minor variations by all countries within the EU. A knowledge of how VAT operates on transactions with customers and suppliers in other member states and indeed outside of the EU is of growing importance in an increasingly global market place.
VAT consultancy is a core competency of Brett & Co. We have wide-ranging experience in dealing with both domestic VAT issues and the international aspects of VAT. Below are just some of the areas where we can advise you on VAT and international trading issues.
topReturns & Administration
Whilst Income Tax, Corporation Tax or Capital Gains Tax issues may only arise for a business several times during the year, VAT will be encountered on an almost daily basis. It is therefore vitally important that your VAT affairs are up to date as it can be easy to fall behind. The requirement to prepare returns on a regular basis throughout the tax year is something that is unique to VAT and increases the burden of administration on businesses, particularly smaller businesses with fewer resources.
We can remove that burden from you by looking after all your VAT administration issues, including:
- Preparing your VAT returns.
- Instituting a system to enable you to prepare your VAT returns with ease.
- Preparing Intrastat (if required) and VIES returns where you are trading with customers/suppliers in other EU states (see the Intrastat & VIES section below).
- Filing reclaims if you were charged VAT on goods or services received in any other EU state (see Foreign VAT Recovery below).
- Dealing with all administrative issues regarding VAT on property transactions. (see Property Transactions below).
topVAT Recovery
In general, if you charge VAT on your supplies, you are entitled to recover the VAT you have paid out in the course of running your business.
However, as with most things in tax law, there are always exceptions to the general rule. We can help and advise you on some of the more complicated issues relating to VAT recovery including:
- Recovering VAT paid where your business makes both taxable and non-taxable/exempt supplies.
- Vat recovery regarding defined "Qualifying Activities".
- Expenses on which VAT recovery is expressly disallowed by legislation.
topProperty Transactions
One of the most complicated areas in VAT legislation, and Irish tax legislation as a
whole, is the operation of VAT on property transactions.
Once VAT is applicable to a transaction, expert advice should be sought on all the current
and possible future VAT implications.
We can advise you on all the VAT issues regarding any property transaction and of prudent steps which can be taken in structuring property deals.
Amongst the issues we can help you with include:
- Determining if VAT applies to your property transaction(s).
- Advice on and calculation of your liability to VAT when selling property or granting leases.
- Advice on surrendering or assigning/selling leases.
- How VAT is operated on subsequent leases (granted following the early surrender of a previous lease).
- Advice on all Revenue concessions and anti-avoidance measures that apply to property transactions.
- How VAT on property applies in a VAT Group situation.
topMargin & Special Schemes
For traders supplying certain goods, there is an optional method of operating VAT,
known as the "Margin Scheme".
Operating a margin scheme can have cash-flow advantages for the trader concerned.
If you are a person in the business of selling second-hand goods, antiques, works of art or
collectors items, you may be eligible to operate a margin scheme in respect of the VAT you
charge. For advice on how to put a margin scheme in place, and the administrative obligations
which arise, contact us.
There are a number of so-called "Special Schemes" in existence for a small number of
business sectors, as an alternative to the normal operation of VAT. These schemes are tailored
to the specific types of businesses which they address.
Each special scheme can offer distinct cash-flow and administrative advantages over
the conventional operation of VAT.
It is important therefore to find out if a special scheme applies to your business and how it operates. We can offer advice on the workings of all special schemes including:
- Second-hand vehicle dealerships.
- Various schemes for Retailers selling goods at multiple VAT rates.
- Agricultural Machinery Retailers.
- Non-EU based suppliers of Electronic Services to private individuals anywhere in the EU. (We can advise those choosing to register for EU-wide VAT in Ireland).
topInternational Supplies
With growing globalisation and the attractiveness of Ireland as a location for manufacturing, service and holding company operations as well as shared service centres, it is vital to receive the correct advice on the application of VAT on international transactions.
VAT is essentially an EU tax with the operation of VAT in each member state being governed by the EU's Sixth Council Directive 1977. Disputes between local tax authorities and traders across the EU can be referred to the European Court of Justice. We therefore keep a close eye on all ECJ decisions regarding the operation of VAT so that our clients are kept up to date with developments which may impact upon them.
Goods:
We can advise any Irish business or foreign business located in Ireland, on how VAT operates on their EU and non-EU exports and imports. We can take care of the administrative side of things, including the extensive reporting requirements which come with intra-EU trading on a large scale (see also Intrastat & VIES below).
Services:
The supply and receipt of services in particular, between traders in two different countries can be a complicated area in VAT. With many specific rules applying to specific services, an in-depth knowledge of all VAT legislation regarding supplies of services is crucial in operating VAT in an international context. We can advise you of the VAT implications of any such supply or receipt of a service, including the receipt of Fourth Schedule services.
topForeign VAT Recovery
There is a mechanism in each EU state for the recovery of VAT paid on goods and services received by a VAT-registered trader in one EU state from a trader in another EU state. A similar mechanism allows non-EU based traders to reclaim VAT paid in an EU state. This is particularly relevant to firms and companies that incur travel, accommodation and subsistence expenses for employees who travel throughout the EU.
We can help any trader who has suffered VAT in any EU state to reclaim it and can also take over the burden of preparing and filing reclaims.
topIntrastat & VIES
"Intrastat" is a reporting system used by the EU to gather statistics on the trade in goods between member states. The Intrastat system can substantially increase traders' reporting requirements.
Any business trading with customers in any other EU member state, must meet their Intrastat reporting requirements. Even if the value of goods received or dispatched to other EU states is relatively low, it must still be reported.
If the volume of goods which a trader receives from or dispatches to other EU states is significant, the Intrastat reporting requirements may also be significant, with detailed returns having to be filed periodically. This can become burdensome on businesses trading with customers in multiple EU countries and can be further complicated when goods are shipped to various distribution points in the EU for onward sale to EU customers.
We can advise such businesses on their reporting obligations and prepare Intrastat returns where required. In addition, for businesses using an SAP reporting system, we can help institute a system which will automatically compile the data necessary for Intrastat returns in multiple EU jurisdictions.
"VIES" stands for the VAT Information Exchange System. When a trader is making supplies to other EU states, be they substantial or minimal, a VIES return may have to be submitted periodically. The VIES system is operated by all EU member states, therefore companies with a large European trading structure may have reporting obligations in multiple EU states.
We can advise on all aspects of the VIES system. For businesses using an SAP reporting system, we can help institute a system which will automatically compile the data necessary for VIES returns in Ireland and in other EU jurisdictions.