Ireland: Public consultation on VAT modernization

Revenue Commissioners seek input on how digital advances can be used to modernize VAT invoicing and reporting system

Public consultation on VAT modernization

As announced in the Minister for Finance’s budget day speech, the Revenue Commissioners have opened a public consultation on value added tax (VAT) modernization that seeks input on how digital advances can be used to modernize Ireland’s VAT invoicing and reporting system.

The consultation opened on 13 October 2023 and will remain open until 12 January 2024.

Revenue is specifically seeking input on the proposed introduction of real-time (or close to real-time) digital transaction-level reporting for domestic business-to-business (B2B) and business-to-government (B2G) trade, supported by mandatory electronic invoicing (e-invoicing) for such transactions. Changes to business-to-consumer (B2C) transactions, VAT payments/repayments and methods of accounting for VAT are not included in this consultation but may be the subject of later consultations.   

The consultation is largely in response to the European Commission’s VAT in the Digital Age (ViDA) proposals announced last December 2022. ViDA includes a proposal for mandatory e-invoicing for cross-border supplies of goods and services within the EU, together with an obligation for suppliers and customers to report transaction-level data from such transactions within a timeframe of two days of the invoice date. ViDA also seeks to harmonize the e-invoicing and digital reporting framework based on a common EU standard.  

KPMG observation

If Revenue were to follow a similar approach to the ViDA proposals, businesses engaged in B2B or B2G transactions would become obliged to issue and receive e-invoices in accordance with a common EU standard, and to digitally report a subset of data from that e-invoice to Revenue in real time or a “near real-time” basis. This would have a significant impact, not only for businesses VAT compliance systems and processes, but their wider finance, accounts payable and accounts receivable systems and processes.

The consultation document does not set out any timeframe for potential VAT modernization changes. However, the EU’s ViDA proposals for mandatory e-invoicing and digital reporting for cross-border transactions are proposed to be effective from 1 January 2028, and it would not be surprising if Revenue sought to align domestic changes in Ireland with the introduction of EU wide changes.

However, the ViDA proposals remain subject to negotiation and unanimous approval at the EU Council so uncertainty remains as to the timing or final shape of those changes. In addition, other EU member states move ahead with proposals to introduce mandatory e-invoicing for certain transactions prior to 2028.

Read an October 2023 report prepared by the KPMG member firm in Ireland


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