Jobs Initiative 2011 – VAT Rate Change

A new second Reduced VAT Rate will be introduced with effect from 1 July 2011 in Ireland.

The Minister for Finance has announced that the second reduced VAT rate of 9% will be introduced for certain goods and services mainly in the tourist industry for the period 1st July 2011 to 31st December 2013.

The new 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 which have an impact on the tourist industry.

The new reduced rate of 9% covers the supplies of goods and services in the following categories:

• The supply of food and drink (excluding alcohol and soft drinks) in the course of catering or by means of a vending machine.
• 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 sun bed services etc., remain liable at the 13.5% rate).

The new reduced rate of 13.5% covers the following supplies of goods and services:

• 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.
• Concrete.
• 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.

In general, goods and services supplied before 1 July 2011 are liable to VAT at the rate in force at the time of supply, which is 13.5%. However, where goods and services are supplied in June 2011 AND invoiced after 30 June 2011, the rate in force in July applies, that is 9%.

Remember, date is critical; a trader supplying goods and services should always apply the VAT rate in force at the time of supply.

Note, in general, any advance payment, including a deposit, received by a trader before 1 July 2011 is subject to VAT at the existing rate of 13.5%. However, where the trader is obliged to issue a VAT invoice for a payment, and the invoice is issued after 30 June 2011, the new rate that applies is 9%.