56. Zero-rating scheme for qualifying businesses

Summary

This section, together with paragraph 7(7) of Schedule 2, sets out a scheme to facilitate business. It provides that traders who derive 75% or more of their annual turnover from zero-rated intra-Community supplies of goods or from exports of goods may apply to have their business inputs (goods, services, intra-Community acquisitions, imports) zero-rated. The zero-rating does not apply to supplies in respect of which VAT would not be deductible in the normal course – for example, petrol, food, drink or most accommodation.

Once a person has been authorised by Revenue to use the scheme, VAT is not charged to him/her in respect of any supplies of qualifying goods and services (as defined).

Details

(1) The terms “authorised person”, “qualifying person”, “qualifying goods” and “qualifying services” are defined for the purposes of the scheme.

• Qualifying persons are those persons whose turnover from exports or intra-Community supplies exceeds, or is likely to exceed, 75% of total annual turnover. For the purposes of establishing annual turnover, sale and leaseback transactions are excluded.
• Qualifying goods and services covers taxable goods and services, but excludes the supply or hire of a car, petrol and the provision of food or drink, accommodation (other than qualifying conferences), entertainment services or other personal services. VAT on those goods and services would not be deductible in the normal course, so they are not covered by the scheme.

(2) A person wishing to become an authorised person must fill out a form and supply any information required of them by Revenue.

(3) Authorisation certificates under the scheme are issued and cancelled as follows:

• (3)(a) Where Revenue is satisfied that a person qualifies they will issue an authorisation certificate to the person.
• (3)(b) The authorisation certificate issued in accordance with paragraph (a) will be valid for such time as Revenue determine. (This will vary depending on the type of operation involved).
• (3)(c) Where an authorised person ceases to qualify, he/she is obliged to notify Revenue in writing of that fact not later than the end of the taxable period in which he/she ceased to be a qualifying person.
• (3)(d) Revenue will cancel in writing the authorisation issued under paragraph (a) where they are satisfied that the person no longer qualifies to be authorised and such cancellation will have effect from the date specified in the notice.

(4) The authorised person is required to forward a copy of the authorisation certificate to each of his/her suppliers in the State.

(5) The supplier of taxable goods or taxable services to the authorised person must quote the authorisation number on all invoices and other documents issued in relation to goods or services supplied to the authorised person.

(6) There are conditions that must be fulfilled in order for an authorised person to be allowed to import goods at the zero rate—

(a) a copy of the authorisation certificate must be produced with the relevant customs entry, and

(b) that customs entry must include both a declaration by the authorised person (or his/her representative) that he/she is an authorised person and a claim for the zero-rating of the importation.

(7) Any subsequent supply by the authorised person of developed property, which has been zero-rated to him/her under this provision, remains liable to VAT. This is ensured by deeming the zero-rated supply to be tax which is deductible under Chapter 1 of Part 8 for the purposes of section 93.

(8) Subsection (8) deals with non-deductible items. It ensures that, if a service is received at the zero rate and the service is received for a non-business or exempt purpose (i.e. all the tax would not have been deductible), VAT is payable on the cost of the service as a self-supply.

(9) Subsection (9) covers implementation. It allows an officer of Revenue to perform any powers, functions or duties of Revenue specified in this section.

Relevant Date: Finance Act 2019