The Irish standard VAT rate returns to 23% on 1 March 2021. The follows a temporary decrease to 21% since 1 September 2020 to help consumers and businesses during the COVID-19 crisis. The temporary cut in the tourism and hospitality services VAT rate from 13.5% to 9% will remain in place until 31 December 2021. Check global VAT and GST rates with VAT Calc’s tracker
Some of the planning points around the VAT rate revision include:
- Update invoice templates, including rental or similar contract-based agreements, where VAT is listed on an exclusive basis.
- Determine the invoice tax point – the date the VAT is due and therefore which rate to use. The normal rules on the earliest of the invoice, payment or supply dates do not apply to prevent deliberate manipulation to avoid the higher VAT rate. The time of supply usual becomes the date to set the VAT rate applicable.
- This includes advance payments, which cannot be used to artificially apply the reduced VAT rate on supplies made after 1 March 2021.
- Credit notes on invoices issued under the 21% rate should also be set at 21% even if issued after 1 March 2021.
- Businesses should review their accounting, ERP, invoicing or tax engine systems, including new tax codes. It is recommended that new codes are created since credit notes and other transactions will still rely on the VAT cut code.