Indirect Tax News - October 2020

Temporary reduction in the standard VAT rate

As part of the July 2020 stimulus package, the Irish Tax Authorities have announced the introduction of a temporary reduction in the standard VAT rate from 23% to 21%.

The reduction in the VAT rate will remain in place for six months from 1 September 2020 until 28 February 2021.

The standard rate of VAT applies to a wide range of goods and services in Ireland including, but not limited to, adult clothing, motor vehicles, petrol & diesel, alcohol, electrical goods, some foodstuffs, and professional services.

It will be at retailers’ discretion as to whether or not they pass the VAT rate cut on to their consumers.

This temporary standard VAT rate reduction does not affect all supplies. Supplies subject to VAT at the reduced rates are not affected, such as restaurant meals and accommodation.

Deirdre Padian