VAT | 28. July 2020

Ireland temporarily reduces VAT

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

19 Irland senkt Mehrwertsteuer temporär ab2880x1400 scaled
19 Irland senkt Mehrwertsteuer temporär ab2880x1400 scaled

Irish government officials presented a stimulus package on 23 July to boost the economy, support businesses, and tackle unemployment following the coronavirus pandemic. 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 selling adult clothing, electrical appliances, most household items and many electronic services. This is the first adjustment to the standard Irish VAT rate since 2012 when the rate was increased from 21% to 23%.

Reducing the standard rate for six months requires most Irish entrepreneurs to adapt their shop and trading systems – often with great effort. Online traders from other countries who 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 to many tourism and hospitality offers, but also certain foodstuffs, pharmaceutical products, and books.

The reduction of VAT in Germany already drew attention to an essential 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 knows all the VAT rates and exemptions that apply in the EU and keeps it constantly updated.

For online merchants who sell their goods in Ireland and already had to update the reduced German VAT rates in July, their shop systems must 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 following months, and the game will start again.

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