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Ethics & VAT Flashcards

1
Q

What are the five principles of the Code of Ethics?

A

The five principles of the Code of Ethics are:

1.	Integrity
2.	Objectivity
3.	Professional Competence and Due Care
4.	Confidentiality
5.	Professional Behaviour
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2
Q

What does the principle of Integrity entail in the Code of Ethics?

A

Integrity requires being straightforward and honest in all professional and business relationships.

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3
Q

What does the principle of Objectivity entail in the Code of Ethics?

A

Objectivity means not allowing bias, conflict of interest, or undue influence of others to override professional or business judgments.

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4
Q

What does the principle of Professional Competence and Due Care entail in the Code of Ethics?

A

Professional Competence and Due Care requires maintaining professional knowledge and skills through current developments in practice, legislation, and techniques.

It also involves acting diligently and in accordance with technical and professional standards.

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5
Q

What does the principle of Confidentiality entail in the Code of Ethics?

A

Confidentiality requires respecting the confidentiality of information acquired through professional and business relationships.

Do not disclose such information to third parties without proper and specific authority, unless there is a legal or professional right or duty to disclose.

Do not use the information for personal advantage or the advantage of third parties.

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6
Q

What does the principle of Professional Behaviour entail in the Code of Ethics?

A

Professional Behaviour requires complying with relevant laws and regulations and avoiding any action that discredits the profession.

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7
Q

What are the key characteristics of VAT?

A

VAT is an “indirect tax on consumption.” It is added to the price of goods and services at every stage in the supply chain.

The cost of VAT can be reclaimed or recovered by each party in the supply chain except for the final customer. The burden of VAT is borne by the final consumer.

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8
Q

When is VAT chargeable? (4 situations)

A

VAT is chargeable on:

1.	Supply of goods and services where:
•	The place of supply is within the State
•	By a taxable person
•	In the course of business
2.	Import of goods into the State from outside the EU/NI
3.	Intra-EU acquisitions of goods by a VAT-registered person
4.	Supply of services by a taxable person when the place of supply is in the State.
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9
Q

How is VAT liability calculated?

A
  1. VAT charged on business sales (VAT on sales) [T1] is owed to Revenue.
  2. VAT borne on business purchases and expenses (VAT on purchases/Input VAT) [T2] may be reclaimed from Revenue.
  3. VAT Liability [T3] is calculated as: VAT on Sales [T1] - VAT on Purchases [T2].
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10
Q

What types of VAT on purchases are non-deductible? (5 types)

A

Non-deductible VAT on purchases includes VAT on:

1.	Food and drink
2.	Accommodation
3.	Entertainment
4.	Petrol
5.	Purchase or lease of motor cars (with some exceptions)
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11
Q

What is the second reduced VAT rate of 9% applicable to? (2 purchases)

A

The second reduced VAT rate of 9% is applicable to hotel/holiday accommodation and the supply of hot food, including take-away food (effective until 31 August 2023).

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12
Q

What are some other VAT rates besides the standard rate?

A

• Farmer flat-rate addition: 5%
• Livestock rate: 4.8%

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13
Q

What is the reduced VAT rate of 13.5% applicable to? (2 main items)

A

The reduced VAT rate of 13.5% is applicable to the sale of property and construction work, as well as electricity and gas (9% until 31 October 2023)

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14
Q

What is the standard VAT rate of 23% applicable to?

A

The standard VAT rate of 23% is applicable to all goods and services not exempt, zero-rated, or liable at other rates. This includes alcohol, soft drinks, chocolate, sweets, petrol, and diesel.

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15
Q

What items are zero-rated for VAT at 0%? (7 items)

A

Items zero-rated for VAT at 0% include most basic raw foods, printed books, children’s clothing, oral medicine, exports, newspapers, e-newspapers, and e-books.

For zero-rated supplies at 0% VAT:

•	Charge 0% VAT on supplies.
•	Can reclaim VAT on purchases and expenses.
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16
Q

What services are exempt from VAT? (6 services)

A

Services exempt from VAT include medical, dental, optical, banking, insurance, and educational services.

For exempt supplies:

•	Do not charge VAT on supplies.
•	Cannot reclaim VAT on purchases and expenses.
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17
Q

Who is a taxable person?

A

A taxable person is any person who independently carries out a business in the EU or elsewhere. It includes persons who are exempt from VAT as well as flat-rate (unregistered) farmers.

The taxable person must register for VAT if turnover exceeds or is likely to exceed certain limits.

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18
Q

Who is an accountable person?

A

An accountable person is a taxable person (for example, an individual, partnership, company) who:

  1. supplies taxable goods or services in the State
    and
  2. is registered or required to register for VAT.

As such, they are required to charge VAT in the State.

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19
Q

What are the VAT registration thresholds in Ireland?

A

The VAT registration thresholds in Ireland are:

•	€37,500 for the supply of services
•	€75,000 for the supply of goods
•	€41,000 for intra-EU acquisitions
•	€10,000 for making distance sales into the State
•	€0 for non-established suppliers
•	€0 for receiving services from abroad
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20
Q

How often does an accountable person normally account for VAT?

A

An accountable person normally accounts for VAT on a two-monthly basis (e.g., January/February, March/April, etc.).

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21
Q

What filing options are available for businesses with low annual VAT payments?

A

Certain businesses with low annual VAT payments may file on a 4-monthly, 6-monthly, or annual basis.

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22
Q

How is the VAT return submitted?

A

The VAT return is made on Form VAT3 and is filed together with the VAT payment via ROS (Revenue Online Service).

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23
Q

What is the deadline for filing the VAT3 and paying the VAT liability, and can you provide an example?

A

VAT3 must be filed, and VAT liability must be paid by the 23rd day of the month following the VAT period. For example, the Jan/Feb 2023 VAT return must be filed, and the liability paid by 23rd March 2023.

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24
Q

What is the VAT reverse charge mechanism and when does it apply?

A

Under the VAT reverse charge mechanism, the receiver of the relevant supply, not the supplier, accounts for the VAT and pays it to Revenue.

This mainly applies to a principal contractor receiving construction services from a subcontractor subject to Relevant Contracts Tax (RCT) and also to certain cross-border transactions.

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25
Q

How does the VAT reverse charge mechanism work for invoicing and accounting?

A
  1. Supplier Issues Reverse-Charge Invoice: The supplier issues the recipient a reverse-charge invoice.
  2. Recipient Accounts for VAT on Sales [T1]: The recipient does not pay the VAT to the supplier but instead accounts for it in their own VAT return under “VAT on Sales” [T1].
  3. Recipient Claims VAT on Purchases [T2]: The recipient claims a simultaneous input credit in “VAT on Purchases” [T2].
  4. Recipient Pays VAT-Exclusive Amount: The recipient pays the supplier for the VAT-exclusive value of the supply.
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26
Q

How does a “normal” transaction to a consumer work regarding VAT?

A
  1. The consumer pays the price plus VAT to the retailer.
  2. The retailer returns the VAT to Revenue.
27
Q

How does a “normal” transaction between VAT-registered businesses work regarding VAT?

A
  1. Purchaser: Pays the price plus VAT to the seller.
  2. Seller: Returns the VAT to Revenue.
  3. Purchaser: Reclaims the VAT from Revenue.
28
Q

How does a reverse charge transaction work?

A
  1. Seller: Charges the purchaser the price with 0% VAT.
  2. Purchaser: Accounts for and returns the VAT to Revenue.
  3. Purchaser: Reclaims the VAT from Revenue.
29
Q

What are the definitions of “Intra-EU Acquisition” and “Intra-EU Supply”?

A
  1. Intra-EU Acquisition: The purchase of goods by a business in one EU Member State from a business in another EU Member State.
  2. Intra-EU Supply: The supply of goods by a business in one EU Member State to a business in another EU Member State.
30
Q

What are the definitions of “Import” and “Export”?

A
  1. Import: The purchase of goods from non-EU countries.
  2. Export: The sale of goods to non-EU countries.
31
Q

What is the VAT treatment for purchases of goods from the EU/Northern Ireland by a VAT-registered business in Ireland?

A

• This is called an Intra-EU Acquisition.
• The Irish purchaser supplies their Irish VAT number to the EU/NI supplier.
• The supplier zero-rates the sale (charges 0% VAT in the EU/NI country).
• The Irish purchaser is liable to Revenue for VAT on the sale but could be entitled to a simultaneous VAT input credit.
• This process is called “Self-accounting” or “Reverse-Charge” basis.

32
Q

What is the VAT treatment for purchases of goods from the EU/Northern Ireland by a non-VAT registered business or non-taxable/exempt entities in Ireland?

A

• The Irish purchaser pays VAT in the other EU/NI country.
• If the Irish purchaser exceeds €41,000 in EU purchases, they must register for VAT in Ireland and then would be subject to the same treatment as VAT-registered businesses (self-accounting/reverse-charge basis).

33
Q

What is the VAT treatment for purchases of goods from the EU/Northern Ireland by a private individual in Ireland?

A

• The Irish purchaser pays VAT in the other EU/NI country.
• If the purchase is a new car, Irish VAT will apply.
• Distance selling rules may also apply.

34
Q

What is the VAT treatment for sales of goods from Ireland to the EU/Northern Ireland when the purchaser is VAT registered?

A

This is called an Intra-EU Supply. The Irish supplier may zero-rate the supply (charge 0%) provided:

•	The EU/NI purchaser is VAT registered in the EU/NI country,
•	The EU/NI purchaser provides their VAT number,
•	The VAT number is quoted on the invoice, and
•	The goods are dispatched to an EU/NI country.
35
Q

What is the VAT treatment for sales of goods from Ireland to the EU/Northern Ireland for a non-VAT registered purchaser (including non-taxable/exempt entities)?

A

The Irish supplier charges Irish VAT.

36
Q

What is the VAT treatment for sales of goods from Ireland to the EU/Northern Ireland for a private individual?

A

The Irish supplier charges Irish VAT, unless distance selling rules apply.

37
Q

What are Intra-EU Distance Sales and what is the VAT treatment for suppliers?

A

Intra-EU Distance Sales are online-ordered sales from one EU/NI country to non-VAT registered customers in another EU/NI country where the supplier delivers the goods. If the value of these sales by a supplier into an EU country exceeds €10,000 in a calendar year, they must register for VAT in that EU country.

Examples:

  1. If an Irish supplier exceeds €10,000 in distance sales into Italy, it must register for and charge Italian VAT.
  2. If a French supplier exceeds €10,000 in distance sales into Ireland, it must register for Irish VAT and charge Irish VAT.
38
Q

What is the simplified VAT rule for distance sellers dispatching goods from a single country in the EU?

A

Distance sellers dispatching their goods from a single country are no longer required to register for VAT or complete multiple VAT returns in EU Member States where they are selling.

39
Q

What is the “One-Stop Shop” (OSS) and how does it simplify VAT for Intra-EU Distance Sales?

A

The VAT due on sales to customers in Member States where the supplier does not have a VAT registration can be remitted through a single EU-wide VAT return, known as the “One-Stop Shop” (OSS), alongside their regular domestic VAT return.

40
Q

What are the general rules for determining the place of supply for Intra-EU supply of services in Business to Business (B2B) transactions?

A

• The place of supply is where the recipient of the service is established.
• The reverse-charge basis applies.

41
Q

What are the general rules for determining the place of supply for Intra-EU supply of services in Business to Consumer (B2C) transactions?

A

• The place of supply is where the supplier is established.
• For the supply of services, the UK (Britain and Northern Ireland) is considered a non-EU supply.

42
Q

What are the VAT rules for imports of goods from non-EU countries?

A

• Irish VAT is payable at the point of entry before being released by customs.
• A Deferred Payments Scheme exists to defer payment until the 15th of the following month.
• VAT is charged at the normal Irish rate for that good.
• Irish VAT-registered persons may claim a VAT input for this import VAT.

43
Q

What are the VAT rules for exports of goods to non-EU countries?

A

• A zero rate (0%) of VAT applies to all Irish exports.
• Irish VAT-registered persons may claim a VAT input for expenses and purchases.
• For the supply of goods, Great Britain is considered non-EU (above rules apply), while Northern Ireland follows the same rules as the EU.

44
Q

What are the VAT rules for an Irish business receiving services from outside the EU?

A

• VAT registered business: Self-account for Irish VAT (Reverse Charge).
• Non-VAT registered business: No Irish VAT, may suffer foreign VA

45
Q

What are the VAT rules for an Irish business supplying services to outside the EU?

A

• B2B: No Irish VAT.
• B2C: Charge Irish VAT.
• For the supply of services, the UK (Great Britain and Northern Ireland) is considered non-EU.

46
Q

What are the special arrangements for cross-border supplies of goods under the Northern Ireland Protocol?

A
  1. Supplies of goods between Northern Ireland and the EU: Treated the same as goods supplied between Ireland and the EU.
  2. Supplies of goods between Northern Ireland and Great Britain: Treated as goods supplied between Ireland and outside the EU (imports and exports).
47
Q

When are property transactions subject to VAT at 13.5%?

A

The supply of property is subject to VAT at 13.5% when it is “supplied for consideration in the course of business” in the following cases:

1.	Sale of any residential property by a developer or builder.
2.	Sale of a developed, but incomplete, property within 20 years of development.
3.	Sale of a developed completed property that is considered ‘new’.
48
Q

What makes a developed property ‘New’ for VAT purposes?

A

A developed property is considered ‘new’ if:

1.	It is the first supply of a completed property within 5 years of its most recent development (5-year rule).
2.	It is the second and subsequent supply of a property within 5 years of its most recent development if it has not been occupied for 24 months in total (2-year rule).
49
Q

What constitutes ‘Development’ for VAT purposes?

A

‘Development’ is defined as either:

1.	A development that intends to or does materially alter the ‘use’ of property, or
2.	A development where the cost exceeds 25% of the consideration on a subsequent sale.
50
Q

What are the exempt supplies of property for VAT purposes?

A

The following supplies of property are generally exempt and VAT is not charged:

1.	Sale of undeveloped land.
2.	Sale of completed properties more than 5 years since development (5-year rule).
3.	Sale of completed properties less than 5 years since development but which have been occupied for 2 years (2-year rule).
4.	Letting of property.
5.	Sale of a private house by a homeowner.
51
Q

What is the “Option to Tax” in VAT on property transactions?

A

Some property transactions may be VAT exempt. However, it may be in the seller’s interest to charge VAT on the sale if they have recovered VAT on purchase (claimed a VAT input credit), as there may be potential VAT clawback implications for the seller.

The seller and the purchaser may jointly elect to opt to tax the transaction.

52
Q

How is the letting of property treated for VAT purposes?

A

The letting of property is considered a service for VAT purposes and is VAT exempt.

53
Q

How does VAT on property interact with Stamp Duty?

A

Where VAT is charged on the acquisition of a property, Stamp Duty is charged on the VAT-exclusive consideration (the value before VAT is charged).

54
Q

What are the general VAT rules for ‘Dual-Use’ Inputs in partially exempt businesses in Ireland?

A

• VAT on purchases/expenses used solely for the VAT-registered business can be fully reclaimed (full input credit).
• VAT on purchases/expenses used solely for exempt activities cannot be reclaimed (no input credit).

55
Q

What are ‘Dual-Use’ Inputs in partially exempt businesses and how are they treated for VAT purposes in Ireland?

A

Many VAT-registered businesses provide both VAT-liable and VAT-exempt goods and services but have expenses for the general operation of the business that contribute to both activities. Examples of dual-use inputs include electricity, advertising, and accountancy.

56
Q

How can a business claim VAT input credits for ‘Dual-Use’ Inputs in Ireland?

A

A business may claim a partial input credit for dual-use inputs. The taxpayer’s turnover is used in the first instance to establish the VAT-apportionment rate.

57
Q

What is a VAT Group and why might companies consider forming one?

A

VAT compliance can be onerous and time-consuming for a group of companies. It can also be a cashflow restraint if inter-group transactions are subject to VAT. Two or more businesses may jointly apply to Revenue to form a ‘VAT Group.’

58
Q

What are the advantages of forming a VAT Group?

A
  1. One member of the VAT group is responsible for the VAT compliance of the whole group, reducing the administrative burden.
  2. VAT is not required to be charged on inter-group transactions, resulting in a cashflow benefit (except for some property transactions).
59
Q

What is a disadvantage of forming a VAT Group?

A

All parties in the VAT group are jointly and severally liable for all VAT obligations of the group.

60
Q

What are the conditions required for VAT Group status?

A
  1. There must be two or more persons established in the State.
  2. At least one person must be a taxable person.
  3. All persons must be closely bound by “financial, economic, and organisational ties.”
  4. Group registration must be necessary or appropriate for efficient and effective administration.
61
Q

What are the conditions for Transfer of a Business Relief (TOB) to apply?

A

Transfer of a Business (TOB) is a relief from applying VAT on the sale of a business by deeming no supply to take place for VAT purposes if the following conditions are met:

1.	The transferor is VAT registered.
2.	The person acquiring the business is an accountable person.
3.	The transfer must constitute an undertaking capable of independent operation.
62
Q

Is Transfer of a Business Relief (TOB) optional, and is it available on the transfer of assets alone?

A

TOB relief is not optional; it’s automatically applied if the conditions are met. TOB is not available on the transfer of assets alone.

63
Q

Is the transfer of a business via the transfer of shares in a company subject to VAT?

A

The transfer of a business via the transfer of shares in a company is exempt from VAT (this is a separate exemption to TOB).

Tax (18 decks)

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