Two-tier VAT Registration

Revenue has introduced a ‘two-tier’ VAT registration concept by applying a ‘domestic only’ or an ‘Intra EU’ status for VAT registration, which took effect on 15th June 2019.

Domestic Only Status

Taxpayers who are not undertaking any intra-EU trade should apply for ‘domestic only status’. A simplified registration process will be available for applicants applying for the ‘domestic only’ status and such registration will be processed by Revenue promptly in the vast majority of cases.

However, such registration numbers will not appear as valid on the European Commission’s online VIES database. If a taxpayer registers for domestic only purposes and subsequently wishes to engage in intra-EU trade, they will be required to submit an application to obtain such status.

Intra-EU Status

Taxpayers applying for an ‘intra-EU’ status which will also cover domestic activity will be required to provide additional information on their VAT registration application form. In particular, there will be an increased focus on the due diligence process.

Revenue’s published guidelines on the updated VAT registration process state that having an ‘intra-EU’ status will result in an automatic VIES reporting obligation. If this is applied in practice and indeed to all those currently registered for Irish VAT, it will add to the compliance burden faced by taxpayers. While only outbound EU supplies need to be recorded on periodic VIES statements, any taxpayer registered with ‘intra-EU’ status will face an automatic VIES Registration.

Revenue’s published guidelines do not confirm whether taxpayers can choose to de-register for VIES in the instance where the taxpayer only receives inbound purchases from the EU and does not make any outbound supplies.

Will the change affect existing VAT registrations?

All taxpayers currently registered for Irish VAT will be automatically treated as having ‘intra-EU’ status. There is no requirement for such taxpayers to contact Revenue. However, it is still unclear whether taxpayers with live VAT registrations granted prior to the implementation of the two-tier registration process will receive an automatic VIES registration.

Limited application of domestic only VAT Registration

Given that Ireland is a small open economy with most Irish businesses engaged in some level of activity with EU based suppliers and or customers, it is envisaged that domestic only VAT registrations will be of limited application. Where such registration is put in place initially it is likely that an intra EU registration will be required at some point in the future.