Summary
Description
What changed?
To help businesses mainly in the hospitality, holiday accommodation, and attractions sectors, the Irish Government reduced the rate of VAT from the reduced rate of 13.5% to the second reduced rate of 9% on a temporary basis. This will revert back to the 13.5% reduced rate from 1 September 2023. This change applies to:
- The supply of restaurant and catering services, guest and holiday accommodation.
- Various entertainment services such as admission to cinemas, theatres, museums, fairgrounds, and amusement parks.
- Hairdressing and certain printed matter such as brochures, maps, and programmes.
Details of the reduction can be found on the Budget 2023 website.
Resolution
The reduced rate of 9% VAT is ending on 1st September 2023. After this date, you should revert to using the usual tax codes at 13.5%.
If you need to record transactions that took place under the temporary 9% reduced rate, you can select the header below to view the process for recording these transactions.
How to account for transactions under the reduced 9% VAT rate
You can create a new tax code to represent the temporary 9% VAT rate, which make's it easier to identify transactions you're entering during the temporary reduced VAT rate period for reconciliation and analysis purposes.
Create new tax codes
You can create new tax codes for transactions that qualify for the reduced 9% VAT rate as follows:
- Create two new tax codes to represent the existing tax codes T3 and T13.
- If you deal with EU reverse charge, or reduced rate purchases from the EC you should also create further tax codes to represent T20, T25 and T26 which are linked to T3 and T13.
We recommend using T44, T45 and if required, T46, T47 and T48. If these are already in use, use the next available codes.
- On the menu bar, click Settings, click Configuration then click Tax codes.
- Select the tax code T44 or the next available code, and click Edit.
- Complete the edit tax code window as follows:
Rate Enter the required percentage as 9.00 Include in VAT Return To ensure the transactions are picked up by the VAT Return, select this check box Reverse Charge From the drop-down list, choose No Resale Select this check box Outside EC Leave this check box unticked Enable EC Code Leave this check box unticked Rate From the drop-down list, choose Reduced Description Enter this description: Temp reduced rate sales and purchases of goods for resale - Click OK.
- Select tax code T45, or the next available code, and click Edit.
- Complete the Edit tax code window as follows:
Rate Enter the required percentage as 9.00 Include in VAT Return To ensure the transactions are picked up by the VAT Return, select this check box Reverse Charge From the drop-down list, choose No Resale Leave this check box unticked Outside EC Leave this check box unticked Enable EC Code Leave this check box unticked Rate From the drop-down list, choose Reduced Description Enter this description : Temp reduced rated purchases of goods for non-resale - Click OK.
- Select tax code T46 or the next available code and click Edit.
- Complete the edit tax code window as follows:
Rate Leave the percentage rate as 0.00 Include in VAT Return To ensure the transactions are picked up by the VAT Return, select this check box Reverse Charge From the drop-down list, choose EU reverse charge Resale Leave this check box unticked Outside EC Leave this check box unticked Enable EC Code Select this check box and then select the following options: EC Purchases, Services Link to Choose T44 or any alternative code you have used Rate From the drop-down list, choose Reduced Description Enter this description : Temp reduced rate EU reverse charge - Click OK.
- Select tax code T47 or the next available code and click Edit.
- Complete the edit tax code window as follows:
Rate Leave the percentage rate as 0.00 Include in VAT Return To ensure the transactions are picked up by the VAT Return, select this check box Reverse Charge From the drop-down list, choose No Resale Select this check box Outside EC Leave this check box unticked Enable EC Code Select this check box and then select the following options: EC Purchases, Goods Link to Choose T44 or any alternative code you have used Rate From the drop-down list, choose Reduced Description Enter this description : Temp reduced rate purchases from EC suppliers - Click OK.
- Select tax code T48 or the next available code and click Edit.
- Complete the edit tax code window as follows:
Rate Leave the percentage rate as 0.00 Include in VAT Return To ensure the transactions are picked up by the VAT Return, select this check box Reverse Charge From the drop-down list, choose No Resale Leave this check box unticked Outside EC Leave this check box unticked Enable EC Code Select this check box and then select the following options: EC Purchases, Goods Link to Choose T45 or any alternative code you have used Rate From the drop-down list, choose Reduced Description Enter this description : Temp reduced rate purchases from EC suppliers - Click OK, then click Apply.
- Click Close, then, if prompted, to save the changes, click No.
This article provides general rather than specific guidance to assist all of our customers, including both in the United Kingdom and Republic of Ireland. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid for our general customer base at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should contact The Revenue. In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.
The VAT or tax codes used in this article are based on the default or recommended codes set up in the software. These may be different in your software.
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