Overview
For Value-Added Tax (VAT) purposes, imports are goods arriving into the European Union (EU) VAT area.
This section will explain:
- when VAT is payable and not payable on importation
- clearing taxable goods through Customs
- Customs-free airport and VAT.
When is VAT payable on importation?
Value-Added Tax (VAT) is payable at point of importation into the State. Imported goods are liable to VAT at the same rate as applies to similar goods sold within the State. For example, goods which are zero-rated on sale within the State are zero-rated at importation.
There are exceptions to this general rule and a list of these goods can be found in Works of art.
VAT, along with Customs Duty, is payable at the point of importation, though in practice most traders have a deferred payment account. In such cases, the amount due is not debited from a traders TAN account until the 15th of the month following importation.
How is the VAT liability on imported goods calculated?
The value of imported goods for the purpose of VAT is their value for Customs purposes increased by:
- the amount of any Customs Duty, Anti-dumping Duty, Excise Duty (excluding VAT) payable in relation to their importation
- any transport, handling and insurance costs between the place of introduction into the European Union (EU) and the State
- onward transportation costs to the place of final destination, if known, at the time of importation.
Input credit in your VAT return for VAT on imported goods
You are entitled, as a VAT registered trader, to take credit for VAT paid on goods imported for the purposes of your business. You must claim this credit in your return in the taxable VAT period concerned, subject to the normal restrictions.
You are a registered trader who qualifies for the deferred payment facility, and you import goods in January and February.
Import VAT due on the January imports will be debited on 15 February while import VAT due on the February imports will be debited on 15 March.
You may reclaim VAT in the January and February bi-monthly VAT return due to be filed by the 19 March.
You must retain evidence of all Import VAT paid, such as the customs declaration, AEP monthly statement or the Customs clearance slip.
When is VAT not payable on importation?
Import Value-Added Tax (VAT) is not payable on goods that are imported by a VAT registered trader who:
- is based in a Customs-free airport
- holds a VAT-free authorisation
- places the goods under any of the following arrangements:
- inward processing
- Customs warehousing
- temporary importation
- external transit
- transhipment.
Relief from Import VAT may also be available where the characteristics of the goods, or the circumstances of their importation, meet the criteria for certain reliefs.
VAT on imported alcohol products
VAT is not payable at importation in respect of imported alcohol products placed under an Excise Duty suspension regime (for example, excise warehouse).
Zero-rated scheme for certain persons
A trader with 75% or more of annual turnover from zero-rated intra-Community supplies of goods or exports can apply for a VAT-free authorisation. This enables the trader to import goods at the zero rate of VAT.
VAT-free importation of goods destined for another EU Member State
Goods from outside the European Union, intended for onward supply, can be imported into Ireland by a VAT registered trader at the zero rate. The goods must then be supplied or transferred to a VAT registered customer in another Member State.
This scheme is known as ‘Onward Supply Relief’ or ‘Procedure 42’. Full details of the scheme and the conditions which apply are available in the Customs manual on import VAT.
Clearing taxable goods through Customs
Imported goods will not be released until an import declaration is made using Revenue’s automated electronic processing (AEP) system.
Payment methods
Import Value-Added Tax (VAT) and Customs Duty is payable through a single AEP transaction. Payment methods include a deferred payment facility and a cash payment facility.
Customs-free airport
Traders operating within the Customs-free airport are regarded as taxable persons. These traders must register and account for VAT in the usual way.
These traders are entitled to have goods supplied to them within the Customs-free airport at the zero-rate providing:
- they quote their registration number
- and
- declare that they are trading within the Customs-free airport.
A Value-Added Tax (VAT) registered trader who brings goods into the Customs-free airport from outside the State qualifies for zero-rating on these goods.
A VAT registered trader trading within the Customs-free airport, who receives goods from a VAT registered trader outside the airport qualifies for the zero rate. Proof of delivery is required.
Supplies of goods between VAT registered traders, trading within the Customs-free airport, qualify for the zero rate.
A VAT registered trader trading in the Customs-free airport, who supplies taxable goods outside the Customs-free airport is liable to VAT (except on exports). VAT registered traders within the Customs-free airport are liable to account for VAT on non-deductible goods acquired free of VAT. VAT on certain goods, such as cars and petrol, is generally not deductible. Traders within the Customs-free airport are liable to account for VAT on any such goods acquired free of VAT.
Goods brought into another part of the State from the Customs-free airport will not be liable to VAT if they have already been taxed. Goods will already have been taxed if supplied by a VAT registered trader trading in the Customs-free airport to anyone other than another VAT registered trader trading in that area.
Postponed accounting
Postponed Accounting for Value-Added Tax (VAT) on imports is available to all VAT registered traders. The traders have to fulfil certain conditions.
Further guidance contains more detailed information on Postponed Accounting.