Value Added Tax (VAT) is a tax charged on the sale of most goods and services in Ireland
VAT is charged at different rates for various goods and services. There were a few temporary changes to VAT rates in 2020 to try and help businesses affected by Covid-19
These are the current VAT rates in Ireland that are in place for 2021 .
The standard rate of VAT.
The standard VAT rate is 21% – (Temporarily Reduced from 23% )
A temporary reduction to the standard rate of VAT is in place from September 1st 2020 until the end of February 2021.
The normal rate of 23% was cut to 21% as part of the Government July stimulus package. (See the end of the article for more details of this temporary VAT reduction.)
The standard rate of VAT applies to a wide range of goods and services. These include for example, the sale of motor vehicles, adult clothing, electrical goods, petrol, diesel, alcohol and tobacco, most household goods, non-basic foodstuffs, many professional services and telecommunications.
The standard VAT rate is charged on all goods and services that do not fall into the reduced rate categories listed below . See below for details of reduced VAT rates.
Second Tier VAT : 13.5%
This 13.5% rate of VAT is usually charged on 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.
- Catering and restaurant supplies, including vending machines and take-away food (excluding alcohol and soft drinks sold as part of the meal)
- Food Supplements
- Hotel lettings, including guesthouses, caravan parks, camping sites etc
- Short term accommodation.
- Cinemas, theatres, certain musical performances, museums, art gallery exhibitions
- Fairgrounds or amusement park services
- Hairdressing services.
Changes From November 1st 2020
The VAT rate for the tourism and hospitality sector was reduced from 13.5 per cent to 9 per cent. This was announced in Budget 2021. The reduced rate will be in place from Nov 1st until December 2021.
The 9% reduced VAT rate will applies to: – catering and restaurant services, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter, and hairdressing.
Third Tier VAT : – 9% is a reduced rate of VAT for
- Facilities for taking part in sporting activities including green fees charged for golf and subscriptions charged by non-member-owned golf clubs.
- electronically supplied publications
Fourth Tier VAT – 4.8% is a rate of VAT specifically for agriculture.
It applies to livestock (excluding chickens), greyhounds and the hire of horses.
Fifth Tier VAT : 0% (Zero) VAT
- Most food including Tea, coffee, milk, bread, butter, cheese, milk , vegetables, meat, etc.
- Not food supplied from a vending machine or in the course of catering.
- NOT food supplements such as slimming or sports supplements and protein supplements.
- Books, children’s clothes and children’s 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.
- All exports,
Covid-19 VAT Reliefs
Revenue has confirmed an extension of VAT reliefs introduced earlier this year to help combat COVID-19. These reliefs were originally due to expire on 31 July 2020, but were later extended to 30 April 2021. The temporary reliefs include:
- The zero-rate of VAT applies to personal protective equipment (PPE), thermometers, medical ventilators, hand sanitiser, and oxygen when supplied to the HSE, hospitals, nursing homes, care homes and GP practices for use in providing COVID-19-related healthcare services.
- Relief from import VAT and customs duties applies to the import of medical goods to combat COVID-19 by or on behalf of State organisations, disaster relief agencies and other organisations approved by Revenue, and which are provided free of charge for these purposes.
VAT Exempt :
There is no VAT charged on
- financial, medical or educational services.
- live theatrical and musical performances except those where food or drink is served during all or part of the performance.
In Ireland – you can buy goods from outside the EU up to a value of €22 without incurring any VAT charges. This includes the UK from Jan 1st 2021. Read more about VAT and Buying From the UK After Brexit
Temporary VAT Rate of 21%
As mentioned earlier – the standard rate of VAT was temporarily cut from 23% to 21% from September 1st 2020 until the end of February 2021.
This will affect VAT on many items such as motor vehicles, adult clothing, electrical goods, petrol, diesel, alcohol, tobacco, most household goods, non-basic foodstuffs, many professional services and telecommunications.
Retailers can decide whether or not they are going to pass on the VAT cut to customers.
In general, goods and services supplied before 1 September 2020 will be liable to VAT at the rate at the time of supply ( 23%).
However, where goods and services were supplied in August 2020 by a trader who is obliged to issue a VAT invoice, and that trader issues the invoice after 31 August 2020, the rate in place in September applies, namely 21%.
Credit or Debit Notes :
Any VAT credit note or debit note relating to a supply of goods or services, which contains a VAT adjustment, should show VAT at the rate in place at the time the original invoice was issued. For example, if goods were supplied in August 2020 and a credit note is issued in September 2020 (due perhaps to an adjustment in the price of the goods or services), the rate of VAT on that credit note is 23%. This is because the goods or services were supplied when the rate of VAT was 23%.
VAT rates in the UK
In the UK – the standard VAT rate is 20%
There is a 5% VAT in the UK rate on home energy , children’s car seats
There is Zero VAT on most food and children’s clothes in the UK
VAT Rates in Ireland 2021