Chapter 2 - Capital goods scheme

63. Interpretation and application

Summary

This section sets the scene for the capital goods scheme by defining terms and outlining the scope of the scheme.

Details

(1) The Chapter applies to capital goods (properties) on which VAT is chargeable to a taxable person or a person who carries on a business in the State. It does not therefore apply to private individuals or those who are not operating in business.

(2) A number of terms are defined for the purposes of the Chapter. Key concepts are outlined below.

• the initial interval for the property is the first 12 months in the life of the capital good.
• the second interval is the period from the end of the initial interval to the end of the accounting year of the capital goods owner. (This means that all subsequent intervals will be aligned with the owner’s accounting period.)
• each interval after the second is called a subsequent interval and is aligned with the owner’s accounting year.
• total tax incurred is defined in terms of the amount charged to the owner on acquisition/development of the property.
  • In a transfer of business case (where there is no VAT and the property is “new”) it is defined as the amount that would have been charged.
  • In a section 56 case (where the property is supplied tax free under the special arrangements for qualifying businesses) it is defined as the amount that would have been chargeable if the arrangements did not apply.

Relevant Date: Finance Act 2019