Finance Bill 2021 – Changes in Indirect Tax

VAT Groups

Finance Bill 2021 will require that when applying to enter into a VAT group, at least one member of the group must be an accountable person (a person who is required to register and account for VAT). Furthermore Revenue will have powers to backdate a VAT group cancellation prior to the issuance of the cancellation notification by Revenue.  

Finance Bill 2021 will also impose an obligation on the VAT group remitter to notify Revenue where there has been a significant change in the financial, economic or organisational links of the members of the VAT group, where an entity in a VAT group ceases to be established in the State or where a member of the VAT group ceases to be an accountable person. Where this notification has not been provided to Revenue within 30 days after the end of the taxable period in which the change occurred, then the group remitter will be liable for a penalty of €4,000. Furthermore, where the group remitter is an entity made up of a body of persons (e.g. a limited company) then the Secretary is also liable to a separate liability of €4,000 where this notification has not been made.

Section 56B Authorisation  

Finance Bill 2021 provides a clarification that where an accountable persons turnover from the supply of zero-rated exports of goods or zero-rated Intra-Community Supply of goods represents 75% or more of the total turnover of that trader for a 12 month period, then that trader may be an authorised person for the purposes of applying for a VAT 56B authorisation.

Deposits

Finance Bill 2021 has amended VAT legislation to provide that the where a deposit has been received and the service in which the deposits has been paid towards has been cancelled, then the recipient of that deposit can no longer issue a credit note to render the taxable amount received as being nil. This is in line with an EU Court of Justice ruling which ruled that cancellation fees are taxable as they constitute a payment for either a service or a right to access a service.

Farmers Flat Rate Addition

Finance Bill 2021 has revised the amount of the flat-rate addition receivable by an un-registered farmer from being 5.6% to 5.5%. This 0.1% reduction is reflective of macro-economic data received from the CSO and Revenue. This decrease is warranted to avoid over compensation, which is contrary to the EU VAT Directive.

Repayment of VAT refunds received under a Ministerial order

Finance Bill 2021 introduces a provisions which allows Revenue to seek a repayment of a VAT refund received by a trader under a Ministerial Order where the VAT refund received was an invalid refund claim or the trader was not entitled to some or all of that refund.

Amendments relating to COVID-19

Effective from 1 January 2021, Finance Bill 2021 will amend Schedule 1 of the VAT Act to allow the importation of goods by the European Commission or by an agency or body established under European Union law where such an agency imports goods into the State in the execution of tasks conferred on it by European Union law in order to respond to the COVID-19 Pandemic to be exempt for VAT purposes. This provision will not apply where the goods being imported are supplied in exchange for consideration by the European Commission or an agency established under European Union law.

Effective from 1 January 2021, Finance Bill 2021 will also amend Schedule 2 of the VAT Act to include the supply of goods or services to the European Commission or an agency established under EU law where the European Commission or associated agency purchases those goods or services in the execution of tasks conferred on it by EU law in response to the COVID-19 pandemic will be Zero-rated for VAT purposes. This provision will not apply where such goods or services are supplied by the European Commission or associated agency in exchange for consideration.

The following supplies may also benefit from the zero-rate of VAT effective from 12 December 2020 to 31 December 2022:

• The supply of COVID-19 vaccines and services closely linked to those vaccines where the vaccines have been authorised by the State or European Commission; and
• The supply of COVID-19 in vitro diagnostic medical devices and services closely related to those devices, where the devices comply with the requirements of EU legislation.