Key VAT Changes
VAT Registration Thresholds
As announced in the Budget, the Bill formally confirms the increase in the VAT registration thresholds from €37,500 for services and €75,000 for goods to €40,000 for services and €80,000 for goods.
VAT Rate Changes
The Bill formally legislates for the VAT rate changes announced in the Budget including:
The extension of the 9% rate for another 12 months to 31 October 2024.
The VAT rate for Audiobooks and E-books is being reduced from 9% to 0% with effect from 1 January 2024.
- Supply & Installation of Solar Panels in Schools:
The extension of the 0% rate of VAT for the supply and installation of solar panels to both primary and post primary schools with effect from 1 January 2024.
As outlined in the Budget, the Bill confirms that with effect from 1 January 2024, the flat-rate addition for farmers will reduce from 5.0% to 4.8%.
Deposit Return Scheme
On 1 February 2024, Ireland's planned new Deposit Return Scheme (the “Scheme”) will go live. The Scheme aims to incentivise consumers to recycle single use containers (i.e. a plastic bottle or can). It works by charging anyone who buys a drink a small deposit for the plastic bottle or can that it comes in. Customers get this deposit back when they return the container to a retailer or other collection point to be recycled.
The Finance (No.2) Bill 2023 introduces the appropriate VAT treatment of the Scheme which provides that the Operator of the Scheme will be obliged to account for VAT on unredeemed deposits. There will be no requirement for any other party in the supply chain (e.g. the drinks producers, retailers etc.) to operate VAT on such deposits.
Legislative Updates to the VAT Act
The Bill provides for some updates to the VAT Act to delete any legislative references which it feels are no longer used or necessary and also to bring our legislation is line with EU legislation with no change to the underlying VAT treatment or practice (e.g. the VAT treatment of Emergency Accommodation).
Determinations on VAT Rates & Exemptions
The Bill removes the ability for a taxpayer to request a formal ruling (i.e. VAT Rate and exemption Determination) in relation to the appropriate VAT rate or whether VAT exemption applies to a supply.
For more specific changes included in the Finance (No.2) Bill, read the following expert insights:
We are here to help and please get in touch with us if you have any queries or you wish to discuss the practical implications of any of the above changes in more detail.