VAT | 28. July 2020

Ireland temporarily reduces VAT

The standard Irish VAT rate will be temporarily reduced from 23% to 21% from 1 September 2020 to 28 February 2021 as part of a stimulus package. by

To boost the economy, support businesses and tackle unemployment in the wake of the corona pandemic, Irish government officials presented a stimulus package on 23 July. As in Germany, the Irish government surprised everyone by announcing a temporary reduction in the standard VAT rate for six months from September. The standard VAT rate applies in Ireland to a wide range of goods and services, including the sale of adult clothing, electrical appliances, most household items and many electronic services. This is the first adjustment to the Irish standard VAT rate since 2012, when the rate was increased from 21% to 23%.

The reduction of the standard rate for six months requires the majority of Irish entrepreneurs to adapt their shop and trading systems – often with a great deal of effort. Online traders from other countries who also export their goods to Ireland must calculate the new applicable VAT rate and pay the tax correctly to the Irish authorities. It should be noted that the reduced VAT rate remains at 13.5%. This means that no changes are due for many offers in the tourism and hospitality industry, but also for certain foodstuffs, some pharmaceutical products and books.

The reduction of VAT in Germany already drew attention to an important function of ClearVAT’s VAT Engine: Temporary changes, as is now the case in Ireland, are automatically transferred to the shops or system landscapes of the retailers. Manual intervention is no longer necessary. ClearVAT’s certified database not only knows all the VAT rates and exemptions that apply in the EU, but also keeps it constantly up to date.

For online merchants who sell their goods in Ireland and already had to update the reduced German VAT rates in July, their shop systems will have to be adapted again. As of January or March, retailers are obliged to turn everything back again. More countries and tax cuts could follow in the next few months, and the game will start all over again.

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