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Taxation

VAT

taxationVAT is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of goods and services effected within the State, for consideration, to their customers. Generally, each such trader in the chain of supply from manufacturer through to retailer charges VAT on his or her sales* and is entitled to deduct from this amount the VAT paid on his or her purchases.

*In some circumstances, particularly in the construction industry, VAT is not charged by the supplier, but instead the customer simply accounts for the VAT as if it had been charged.
Who must register for VAT?

A trader is generally required to register for VAT for making supplies of goods and/or services, subject to his or her turnover exceeding certain thresholds.

The most common are €37,500 for the supply of services, and €75,000 for the supply of goods. Some traders are generally not required to register for VAT, although they may choose to do so.

Relevant Contracts Tax (RCT)

RCT only applies to payments made by a principal contractor to a subcontractor under a relevant contract (this is a contract to carry out, or supply labour for the performance of relevant operations in the construction, forestry or meat processing industry). A list of construction operations that are subject to RCT is available here.

Electronic RCT System

All principal contractors in the construction, forestry and meat processing sectors are obliged to engage electronically with Revenue and should:

Local Property Tax (LPT)

ValuationOn-line LPT calculator
Self assessment requires property owners to honestly assess the market value of their own property. If a property is smaller or larger than the average for the area, is in a significantly poor state of repair or has exceptional or unique features, this will have to be factored into the assessment of the valuation band of the property.
When you have self assessed the current market value of your property and identified the valuation band you can use Revenue’s on-line calculator to determine the amount of LPT you have to pay.

Corporation Tax

Corporation Tax is charged on all profits (income and gains), wherever arising, of companies resident in the State, with some exceptions, and non-resident companies who trade in the State through a branch or agency.

Revenue Examination of Returns, Books and Records
What is a Revenue Audit?What form will the audit take?
A Revenue audit is a cross-check of the information and figures shown by you in your tax returns against those shown in your business records.

Revenue audit covers the following types of tax returns:

  • Income Tax, Corporation Tax or Capital Gains Tax returns and/or
  • The returns submitted in respect of VAT, PAYE/PRSI or Relevant Contracts Tax (RCT)
Typically, an audit involves a series of steps, as follows:

  • On arrival, the auditor identifies himself or herself to you and explains the purpose of the audit. An indication of the length of time he or she expects to spend on your premises is also given
  • You are given an opportunity to disclose to the auditor any inaccuracies in your tax return
  • The auditor will examine your books and records to verify that the figures have been correctly calculated and that the tax returns and/or declarations for the different taxes are correct
  • If the auditor finds the returns to be largely correct as is often the case, you will be told so as soon as this becomes clear
  • If the auditor finds that adjustments are required, he or she will quantify the adjustments and the additional tax. The details of how the additional tax arises will be discussed with you and you will also be notified in writing
  • At the final interview, the auditor will ask for your agreement to the total settlement figure
  • Once agreed, the full amount should be paid to the auditor who will issue you with a receipt

Tax Clearance Certificates

A Tax Clearance Certificate is a written confirmation from Revenue that a person’s tax affairs are in order at the date of issue of the Certificate. In some instances a Certificate may be issued to a customer who has tax arrears provided such arrears are covered by an installment.

Applications for a Tax Clearance Certificate

Taxpayers requiring a Tax Clearance Certificate should ensure that their tax affairs are in order before submitting an application for a Certificate. Customers (or their agents) registered with the Revenue Online Service (ROS) can check the status of their tax affairs using the ROS\Customer Information Services. If a customer’s tax affairs are not in order there is little point in applying for a Certificate – such applications, that will in any event be refused, simply create unnecessary expense and delay for all concerned.revenue

Tax Payment Difficulties

Revenue is determined to maintain the high levels of compliance notwithstanding the difficult economic circumstances in which businesses and taxpayers are operating. Revenue expects that taxpayers and businesses organise their financial affairs to ensure that they pay their tax debts as they fall due.

Revenue acknowledges that in the current economic slowdown some businesses and taxpayers are experiencing difficulties in meeting their tax payment obligations even where they are fully committed to meeting those obligations and in more favourable economic and financial circumstances did precisely that.

Revenue’s approach to individuals and businesses experiencing tax payment difficulties is set out in the documents on the Revenues Website www.revenue.ie