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Updates to Revenue guidance on Irish VAT groups

AUTHORs: Matthew Broadstock co-author(s): Dara Higgins Services: Tax DATE: 11/03/2022

The Irish Revenue Commissioners (“Revenue”) have recently made some important updates to their guidance material in respect of Irish VAT groups (the “Guidance”).  These updates were announced in Revenue eBrief No. 046/22 published on 25 February 2022 and flow from amendments to Irish VAT legislation brought about by the Finance Act 2021.

We have set out below our summary overview of the recent updates.

Effective date of VAT group registration

Where two or more persons apply to Revenue for the creation of a VAT group, such VAT group comes into existence only upon the issuance by Revenue of a written notification to each member of the VAT group.  The notification will specify the date that the VAT group registration becomes effective, which shall be no earlier than the beginning of the bi-monthly VAT period in which the application is made.  This represents a change to the previous position whereby VAT groups could be registered with retrospective effect. 

‘Accountable person’ requirement

When forming a VAT group, it is now a requirement that at least one member of the group be an ‘accountable person’ for Irish VAT purposes.  This effectively means that at least one of the prospective VAT group members should be registered for Irish VAT.  Prior to the legislative amendment, the rules simply required that at least one group member be a ‘taxable person’ ie, a business.    

Moreover, the VAT group when formed is deemed to act as a single ‘accountable person’ in the context of all transactions carried out by the individual VAT group members. Previously, a VAT group was treated as acting as a single taxable person from an Irish VAT perspective.

Revenue notification requirements

There is now a specific obligation for the VAT group remitter to notify Revenue in the following eventualities:

(i)              where there has been a significant change in the “financial, organisational or economic links” between the persons in the group;

(ii)             where any person in the VAT group ceases to be established in Ireland (for VAT purposes); or

(iii)            where the requirement that at least one member of the group is an accountable person is no longer met.

Where any of the above events occur, the notification must be made by the group remitter within thirty days. 

With respect the ‘establishment’ requirement, the Guidance helpfully confirms that if a person has an establishment in Ireland and applies to join an Irish VAT group, it is the entire person, including any overseas Head Office or Branches, that joins the Irish VAT group.  This aligns with the CJEU decision in FCE Bank (C-210/04) which confirmed that a head office and foreign branch are a single person for VAT purposes.

If you would like to discuss how to ensure your business can navigate the changes that will arise from the recent updates to the VAT grouping provisions, or indeed discuss any other matters, please contact Matthew Broadstock or your usual Matheson contact.