Supplies/ movements of goods into and out of the European Union respectively are treated as imports and exports. Particular rules apply which are dealt with in another chapter.
Supply/movements of goods between businesses and individuals based or resident in different in member states of the European Union are treated differently to imports and exports. They are called acquisitions and supplies and different rules apply.
As is the case with VAT generally, the place of supply rules determine in which EU state VAT is charged. In order for Irish VAT to apply, the goods must be supplied in Ireland. The place of supply rules depend on a number of factors including whether the goods are transported across borders and the status of the buyer and seller. Place of supply does not coincide with its everyday meaning.
Where goods are not dispatched or transported, in most cases, the place of supply is where the goods are situated the time they are supplied. The time of supply refers to the point at which the ownership of the goods or the right to do with the ownership of the goods, passes.
The default and basic rule to which there are many important exceptions is that the place of supply of goods which are dispatched or transported is where the transport begins. It does not matter who arranges the transport; supplier or buyer.
Where goods are sold by a business established (based) in one EU state to a business based in another or a customer resident in that other VAT VAT is presumed to be charged in the first state, in the absence of other deeming rules. However, for B2B and many B2C sales there are significant exceptions that apply in most cases.
Distance B2C Sales
This rule does not apply to a distance selling arrangement. A distance sale is one made by a supplier in one EU state to a consumer/unregistered person in another EU state where the supplier delivers or arranges delivery of the goods to the customer. This would cover Internet sales. The place of supply is where the dispatch or transportation ends.
Where the supplier’s turnover in the state of receipt is less than the threshold for annual sales designated by that state (€35,000-€100,000) the supplier was not obliged to register in that state, unless he so elected. If the sale is a less than the turnover threshold in the recipient state and the supplier does or is not deemed to elect for VAT then the place of supply is deemed to be where the transportation began.
Accordingly they charged their home state VAT to consumers in the other state. Once they exceeded the turnover threshold in the other state they must register there and charge recipient state VAT. Since 1 July 2021 the thresholds for registering for supplies in the recipients member state have been withdrawn.
There is an exemption of €10,000 for all EU sales designed for very small businesses. As part of the reforms the VAT One Stop Shop rules allow, a single registration with the home revenue authority satisfies the obligation to register in the recipient’s state. In this case Irish Revenue with collect value added tax on behalf of the revenue authorities in the recipient’s states and remits to them.
The distance sales thresholds did not apply to the sale of exercisable products. These include such things as cigarettes alcohol and fuel. In this case supplier of goods to nonregistered persons has always been subject to the obligation to register in the recipient state where it delivers or arranges to deliver the goods..
Intra-community (EU) supply
There is an intra-community supply, goods are supplied to a VAT registered person in another EU state. The supplier must obtain the buyer’s /recipient’s VAT numbers and quote it on the VAT invoice. Records must be retained. The intra-community supply is zero rated.
If supplier does not have a valid VAT number from the EU buyer then it must charge Irish VAT. Proof of transportation and delivery will be essential for audit purposes. This may involve copies transport documents. EU VAT numbers can be authenticated under an EU wide system operated by the revenue. It is available online
Intra-community (EU) acquisitions
The intra-community supply is separate to the intra-community acquisition. The intra-community acquisition is prospectively subject to set off against input VAT with no net VAT being payable.
This exception to the general rule applies to a very significant amount of all trade. The general principle is that when goods are supplied B2B cross-border between EU states the recipient self accounts for VAT. The supplier does not charge VAT. There is an intra-EU acquisition and an intra-EU supply.
The is an intra-EU acquisition where goods are supplied by an entity or person which is VAT registered in one EU state to an entity or person in another state (other than an individual who is not a taxable person (not in business) and the goods are dispatched or transported from one state to the other as a result of such supply.
In strict terms the treatment also applies where the supply is made by person obliged to be registered in a state, a flat rate farmer or a person carrying out an exempt activity. It applies to to any recipient/buyer who is registered for VAT or is entitled to be registered for VAT.
The goods need not move to the buyer’s member state provided that they move to another EU state, other than that of the supplier.
The treatment does not apply to margins scheme goods.
There is supply of goods when an Irish business transfers goods to another state for the purpose of business.Provided the provided the business or its branch is registered in the other state, it can be zero rated the supply as an intra-community supply and the acquisition can prospectively be credited in in the state of acquisition.
Obligation of Parties
The supplier charges zero rate VAT. The sale must be included in the supplier’s VAT information exchange system (VIES) form. For businesses with larger turnovers it must be included in the Intrastat statistical return form return.
This recipient self accounts for the value added tax on the acquisition at the rate is the member state of acquisition.. The recipient will usually be entitled to claim an offsetting input/purchase so that no net VAT will be payable. The sale may have to be included in the Intrastat statistical return form return.
The place of supply for an intra-community acquisition is where the dispatch or transportation ends. It is also deemed to take place in the EU state which issued the VAT number which the buyer quoted to the supplier. These will usually be the same place. If however the goods are dispatched to another EU state than that of the buyer, the buyer will make an intra-community acquisition there. This will oblige it to register for VAT and self account in that place.
Where there is a single movement of goods in a chain of sales and sub- sales there may only be one intra-community acquisition. Accordingly there may be a domestic supply in the state where the goods leave or in the state where the goods arrive with consequent requirement for registering for and charging VAT there.
A business may make an intra-EU acquisition in another state when it sends its own goods to another EU state. This may require the supplier to register in the other EU state and self account for value added tax there. This may occur in the context of the subsequent sale of the goods in that state to its customers. Each of these events would require it to register for VAT there.
The consignment stock exception mentioned previously is an EU facilitation which may avoid the requirement to register for VAT where the goods are acquired. Conditions apply. See the separate chapter.
There is an exception to the principle that sending goods to another state for the purpose of business is a supply of the goods potentially subject to VAT.
- The transfer of goods with a view to the export, supply modification and repair is zero rated. Conditions apply. If they are to be supplied there the Irish supplier would have to register for VAT as there would be a supply of goods for VAT purposes in that EU state.
- The transfer of goods for the purpose of having a service undertaken on them is exempt provided they are returned to the business concerned in the State.
- The transfer of goods that are installed or assembled in the EU state of arrival. The supply happens where the installation and assembly takes place.
- A transfer for the purpose of temporary use in connection with the service. The seervice will usually be subject to VAT in that place.
- Transfers for the purpose of temporary use in the other EU state.
Triangulation is a relief that is available where there are three EU based traders involved in a chain supply of goods. An established business A (based) in member state A purchases goods from B established/based in member state B and sells them to C established in member state C. The goods are sent directly from member state B to member state C. In the absence of relief A would have to register for VAT in member state C where there is an intra-EU acquisition and charge domestic VAT to C. From B’s perspective there is an intra-EU supply because it is dispatched the goods to another EU state and has been furnished with A’s VAT number.
Under the relief if if A quoted its Irish VAT number thereby making an intra-EU acquisition in Ireland and the goods are transported to another EU state (C) to a person registered for VAT there, then provided the specific form VAT invoice applicable to the relief is raised the recipient C in member state C self accounts for VAT. A is deemed to have made neither an intra-EU acquisition in state A nor in state C. A must include particualrs in its VIES return.
Installation and Assembly
Where goods are installed or assembled, the place of supply is where they are installed or assembled. Where the supplier is based outside the state and the buyer is a taxable person/VAT registered in the state it self accounts and the supplier does not need to register in the state. Where the buyer is a non-taxable person/private person the supplier must register for VAT in the state and charge VAT.
Private Purchase of Vehicle
The purchase of a new means of transport (including a motor vehicle) from a person or entity based in another EU state is treated as an intra-community acquisition. A private person must register and self account for VAT on the acquisition. A private person must register for this specific purpose. He or she will not be entitled to reclaim VAT.