Rate Change – Jobs Initiative 2011
Introduction of a second Reduced VAT Rate with effect from 1 July 2011
The Minister for Finance has announced that a second reduced VAT rate of 9% will be introduced in respect of certain goods and services (mainly related to tourism) for the period 1 July 2011 to 31 December 2013. The 9% rate applies to restaurant and catering services; hotel and holiday accommodation; admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions; fairgrounds or amusement park services; the use of sporting facilities; hairdressing services; printed matter such as brochures, maps, programmes, leaflets, catalogues and newspapers.
This measure will be provided for in the forthcoming Finance (No. 2) Bill 2011.
Supplies of goods and services at the new 9% rate:
- the supply of food and drink (excluding alcohol and soft drinks) in the course of catering or by means of a vending machine (See footnote 1)
- hot take-away food and hot drinks
- hotel lettings, including guesthouses, caravan parks, camping sites etc
- admissions to cinemas, theatres, certain musical performances, museums, art gallery exhibitions
- amusement services of the kind normally supplied in fairgrounds or amusement park services
- the provision of facilities for taking part in sporting activities by a person other than a non-profit making organisation
- printed matter e.g. newspapers, brochures, leaflets, programmes, maps, catalogues, printed music (excluding books)
- hairdressing services (Note: beauty treatments:- for example, facials, massages, nail treatments, tanning or sunbed services etc., remain liable at the 13.5% rate).
Supplies of goods and services remaining at the 13.5% rate
- bakery products, excluding bread
- residential property
- building services related to residential property, including installation
- routine cleaning of residential property
- minor repairs of bicycles, shoes or leather goods, clothing or household linen
- non-oral contraceptive products
- goods used for the agricultural production of bio-fuel
- agricultural services
- certain nursery or garden centre stock
- animal insemination services and livestock semen
- children's car safety seats
- waste acceptance and disposal services
- greyhound feeding stuff and live poultry and live ostriches
- fuel for power and heating, coal, peat, timber, electricity, gas (other than auto LPG), heating oil
- non-residential property
- building services related to non-residential property, including installation
- routine cleaning of non-residential property
- tour guide services
- short-term hiring of cars, boats, caravans, mobile homes, tents or trailer tents
- repair and maintenance of cars, other vehicles, vessels and aircraft
- services consisting of the care of the human body
- jockey services
- photographic services including photographic prints
- car driving instruction
- veterinary services
- certain works of art, antiques and literary manuscripts
List of frequently asked questions from businesses relating to a change in VAT rate.
What impact will the rate change have on traders?
In general, goods and services supplied before 1 July 2011 are liable to VAT at the rate in force at the time of supply, namely 13.5%. However, where goods and services are supplied in June 2011, by a trader who is obliged to issue a VAT invoice, and that trader issues the invoice after 30 June 2011, the rate in force in July applies, namely 9%.
A trader supplying goods and services to private individuals should always apply the VAT rate in force at the time of supply.
How will credit notes be treated?
Any VAT credit note or debit note relating to a supply of goods or services, which contains a VAT adjustment, should show VAT at the rate in force at the time the original invoice was issued.
For example, if goods are supplied in June 2011 and a credit note is issued in July 2011 (due perhaps to an adjustment in the price of the goods or services), the rate of VAT on that credit note is 13.5%. This is because the goods or services were supplied when the rate of VAT was 13.5%.
How are advance payments received before 1 July 2011 treated?
In general, any advance payment, including a deposit, received by a trader before 1 July 2011 is subject to VAT at 13.5%. However, where the trader is obliged to issue a VAT invoice for that payment, and the invoice is issued after 30 June 2011, the new rate applies, namely 9%.
What is the effect of the change of VAT rate on contracts with fixed interval payments?
When payments for continuous supplies, due at fixed intervals over an agreed time-frame, are invoiced and due before 1 July 2011, they should be treated as taxable at the 13.5% rate; where invoiced and due after 30 June 2011, they should be treated as taxable at the 9% rate. This applies even if the interval over which the supplies take place spans the time both before and after I July 2011.
What is the position with contracts existing on 1 July 2011?
Where a contract to supply goods or services is entered into before 1 July 2011, and the contract is not completed until after that date, the agreed VAT inclusive price may be subject to an appropriate adjustment due to the change in the VAT rate, unless there is agreement to the contrary between the contracting parties.
Please refer to paragraph 3(1) to 3(3) of Schedule 3 of the VAT Consolidation Act 2010 for further information.