General Flashcards
Desirable Characteristics of a Taxation System (Adam Smith)
Equity
Certainty
Convenience
Efficiency
Tax Neutrality
The ability of a tax to be applied without changing consumer behaviour
Or
The marginal amount of taxation added being compensated for by a reduction in income taxes
The Vat Directive
An EU council directive that secures community law uniformity
It overrides disagreeing national law (aka, it has primacy)
Derogation
Permission granted to deviate from a “shall” provision of The VAT Directive
VAT Consolidation Act (VATCA) purpose
Consolidated/replaced all previous VAT legislation for easy access and cross-referencing
In what way is VAT on imports different in the UK when compared with the EU?
VAT on imports is now deducted from periodic VAT inputs rather than paid upfront.
(This is unusual)
Conditions for VAT to apply
Must be a supply of goods or services
Supply made for sale within Ireland by a taxable person
Must be supplied in the course/furtherance of business
Input VAT
VAT incurred by a registered person when purchasing from another VAT-registered trader
Output VAT
VAT charged by a registered person when selling to an(y)other person
What happens when goods previously used for making taxable supplies are moved to an exempt use?
A self-supply of said goods is deemed to have been made
Likewise if goods are appropriated for private use
Examples of unusual supplies of services:
A vending machine: Supplying the service of providing food fit for immediate consumption
Operation of a canteen by a business: A self-supply of a service
Leasing/Hiring goods: Supplying the leasing service in addition to the actual good
Place of Supply of Services:
When Business-To-Business Supply
Where the customer has their establishment
Place of Supply of Services:
Where Business-To-Customer Supply
Where the supplier’s establishment is located
Place of Supply of Services:
When connected with Property
Where the property is located
Place of Supply of Services:
Goods or Passenger Transportation
Place(s) transport occurs
Place of Supply of Services:
Catering
Where supply takes place
If onboard an international transit: The place of departure
Rates of VAT in Ireland
Zero: 0% Livestock: 4.8% Flat: 5.4% Reduced: 9% or 13.5% Standard: 23%
Examples of goods/services for which 0% VAT applies
Goods exported outside the EU
Goods bought by the VAT-registered within the EU
PPE for COVID
Import-Export Transportation services
Examples of good/services for which the 9% reduced rate of VAT applies
Newspapers
Ebooks
Examples of goods/services for which the 13.5% reduced VAT reate applies
Heating fuel The service of providing food and drink Cinema tickets Building work Property
VAT Exempt Supplies (Definition and Examples)
NOT the same as zero-rate VAT, though result is.
Doesn’t require registration or as much record-keeping
Examples: Most financial services Insurance An Post Educational and Medical services The lottery
Principal Supply
The most predominant pert of a composite supply
Ancillary Supply
Part of a composite supply that is not dissociable from the principal supply
Composite Supplies
A supply comprising of two or more supplies of goods/services made in conjunction with one another.
Taxed at the VAT rate applicable to the principal
Multiple Supply
Two or more individual supplies made side by side (under one price) e.g. a book and notebook combo deal
Where each item can be used seperately if so chosen
Two-Thirds Rule
Where the cost (excl VAT) of a service supply is made up of >two-thirds the contract price, use the VAT rate applicable to the goods not the service.
Who is obliged to register and account for VAT?
Traders supplying:
>€75,000 of goods
>€35,000 of services
Foreign traders supplying in Ireland
Construction contractors who subcontract work
Is it possible to voluntarily register for VAT if under the turnover thresholds?
Yes, farmers and fishers often do.
Allows them to recover VAT from purchases but does increase the administrative burden
Deeming Provisions
Circumstances under which VAT is charged when normally it wouldn’t be.
E.g. VAT is charged on hotels serving food as it is “deemed” a service not a good.
Reverse Charge
When the obligation to charge VATapplies to the receiver of the service not the supplier.
E.g.
Subcontracted construction work: Principal contractor is accountable
Electricity or Gas supplied to a business: the business is accountable for VAT
The Single Market
The economic market place consisting of the 28 EU member states
Goods Exported to non-EU countries:
Place of Supply
Rate of VAT
Paperwork Requirement
Place of supply: Where the transportation begins (Ireland)
Rate of VAT: 0%
(Transportation within Ireland immediately prior to exportation is also taxed at 0%, e.g. from Athlone to Dublin Port)
Paperwork requirement: Evidence of export
Goods Exported to Businesses within the EU:
Place of Supply
Rate of VAT
Paperwork requirement
Place of Supply: Ireland
Rate of VAT: 0% (as long as customer is VAT-registered)
Paperwork: Evidence of dispatch including customer VAT number
Goods exported to EU-resident Individuals:
Place of Supply
Rate of VAT
Place of Supply: Ireland (usually, unless above a certain threshold)
Rate of VAT: Dependent on type of goods
Goods Imported from non-EU countries:
Place of Supply
Application of VAT
Paperwork
Place of Supply: The point of importation (Ireland)
VAT: Applied to total cost (including customs, excise, insurance, etc.) at the rate applicable to such goods in Ireland
Transportation at zero-rate VAT
Paperwork: Accounted for on VAT returns when customer registered for VAT
Goods Imported from EU:
Rate of VAT
Paperwork Requirement
Rate of VAT:
If the customer is registered for VAT, at Irish rate. If not, foreign rate.
Paperwork: An invoice with both the supplier and customer’s VAT numbers (where possible)
Under what circumstances must a customer importing goods from within the EU register for VAT (even if their business type is usually not accountable for VAT)?
If they are importing >€41,000 of goods within 12 months
Triangulation
A middleman is not obliged to register for VAT.
If there are a series of transactions all within the EU, the final customer accounts for supply on a reverse charge basis.
Call-Off Stock
Goods imported on behalf of a final customer, but warehoused and not transferred to that customer until a later date.
(The final transfer of the goods to the customer is deemed NOT to be a supply for VAT purposes, since they’ve already bought the goods.)
Services Received from Abroad:
Place of Supply
VAT requirements
Place of Supply:
If business-to-business, where the recipient is located.
If B2C, where the supplier is located.
If associated with land or buildings, where that property is located.
Business recipients MUST register for VAT (no threshold)
Mini One Stop Shop (MOSS)
Optional scheme to account for VAT due on multi-country EU supplies via a web-portal in one member state.
(Was originally just for e-services but has applied to goods too since 2021)
What paperwork requirement occurs if goods annually dispatched to EU states exceeds €635,000?
Monthly detailed “Intrastat” tax filings are needed in addition to the usual annual returns.
Self-billing (definition)
When a customer issues an invoice on behalf of their supplier
- Often done by large businesses who have small suppliers
What happens when an input good/service is used for both taxable and non-taxable supplies?
It is considered “dual-use” and a partial deduction of input VAT is given based on how much turnover of the business is on taxable vs non-taxable supplies for that year.
VAT Due vs VAT Payable
Due = Total output VAT
whereas
Payable = VAT due - input VAT
When must VAT payable be paid?
By the 19th of the month following the taxable period
Taxable Period
Two months beginning on the 1st of Jan, Mar, May, Jul, Sept, and Nov
What do Margin Schemes allow?
For VAT to be charged only on the margin (23%) applied by the vendor:
- Only for use with second hand goods, artwork, collectibles, and precious metals.
- All taxed at 23% regardless of goods type
Do state and local authorities pay VAT?
Not unless their activities are of a commercial nature
When must farmers register for VAT?
If supplying:
- Supplying agriculture services > €37,500 - Supplying biological assets worth >€75,000
Flat-Rate VAT for Farming
5.4%
added to supplies from farmers to VAT-registered customers and kept by the unregistered farmer to compensate for VAT incurred on purchases
