VAT - Value Added Tax

Value Added Tax ( VAT ) is extremely significant in the economic life of the country, and is one of the main contributors to the national exchequer. It may cause severe cashflow difficulties for registered traders, while it can constitute a significant additional cost for unregistered businesses. Most entities would benefit from a review of their VAT status in order to minimise these problems.

It is worth noting the registration thresholds : € 75 000 for supplies ( or sales ) of goods ; € 37 500 for supplies of services. Not all businesses with turnover exceeding these thresholds must register for VAT. Many businesses and professions, such as doctors, dentists, and insurance brokers supply “exempt” services and are not registered for VAT regardless of their turnover. Others such as farmers and fishermen, may elect to register. The decision on whether or not to make this election can be complex, and professional advice is recommended. FDC Tax Department Ltd are well placed to offer such advice, given our vast experience in advising the farming community for 20 years

One of the most difficult areas for even the professional tax practitioner to master is that of VAT on immovable property. The legislation in this area was radically overhauled with effect from 1 July 2008. One extremely complicated system was replaced with another which is arguably even more complicated.

In basic terms, the sale of new properties, that is those which are less than 5 years old, are subject to VAT at 13.5%. Older properties are not, but the seller may often exercise an option to charge VAT if the purchaser agrees. The seller might wish to do so to preserve VAT credits which he had obtained on his own acquisition of the property, or even acquire VAT credits to which he had not been previously been entitled. Leases of property are exempt from VAT, but the landlord may often exercise an option to charge VAT. Properties have been allocated a VAT life of 20 years, and transitional provisions have been made to cater for transactions regarding properties which were constructed or re-developed since 1988.

A noteworthy feature of the new regime is that any person selling immovable property other than their principal private residence should get advice regarding the VAT implications, if any, of the sale. It is now possible that non VAT-registered businesses may have a VAT liability on sale of land or buildings which had been constructed or developed in recent years.

Professional advice regarding VAT is essential if any sale, purchase, lease or letting of land or buildings is contemplated. FDC Tax Department Ltd has developed significant expertise in this area, which includes successful representation of clients at hearings of the Appeal Commissioners

For further information please contact us today