The past week has highlighted some amazing human endeavours. One of those is the successful Artemis II mission and the journey of the crew of four around the moon and back to earth.
While the four astronauts are the ones who have crewed the craft, the overall mission is the product of massive preparation and collaboration of so many more.
So what has that got to do with VAT?
Quite a bit actually. To start with, the last moon landing was the Apollo 17 mission in December 1972. That was about a month after VAT was introduced in Ireland. Space missions, like VAT, are complex. Getting it right takes time with individual and team effort. There are many stakeholders. And success helps deliver more.
Success is of particular relevance for businesses operating in the current economic climate. Alongside business growth, opportunities to save costs are key. Getting VAT right for a tax on turnover rather than profit will not necessarily create savings, however the alternative can be expensive, with related costs not necessarily possible to pass on or recoup.
To help keep VAT right and so as to not get lost in a galaxy of VAT complexities, the following are a sample top three actions to consider right now. These are just the headlines, but the actions are also timely for any Financial Year or Period end reviews and related work.
VAT Cost Reductions / Recovery
1. VAT & Bad Debt Relief
When a customer fails to pay an invoice, your business loses both the value of the sale and the VAT you have already handed over to Revenue. VAT Bad Debt Relief allows you to recover that tax.
As with most VAT reliefs, there are conditions to be satisfied, but the process is relatively straightforward. While any claim is subject to scrutiny by Revenue, the outcome of any action on this should be positive and relatively quick.
2. Partial VAT Recovery Annual Adjustment
If your business generates both taxable and exempt income, such as a medical practice with an in-house retail pharmacy, a financial services business with a mix of activities or a property rental portfolio with a mix of commercial and residential lettings, you are unlikely to be able to reclaim 100% of VAT you incur on your overheads.
To stay compliant, you must perform an Annual Adjustment. This action is to ensure you have not over-claimed or under-claimed VAT. Such adjustments should be completed within 6 months of your Financial Year end.
Where your partial VAT recovery rate increases to that used in your most recent Financial Year, any adjustment should be made as soon as possible. There is no need to wait until the 6-month timeline has been reached.
If your VAT recovery rate decreases compared to the rate which has been used, that will likely result in a VAT payment to Revenue. That needs to be dealt with within the 6-month period, so work on that would be appropriate to schedule for completion too.
3. EU VAT Reclaims
Many Irish businesses travelling for trade fairs or involved in cross-border projects in other EU Member States may incur VAT in other EU Member States. Such VAT which they have paid in the other EU Member States is often written off. Some of that VAT may be recoverable.
If you are VAT registered in Ireland and not registered in the Member State where the expense was incurred, you can use the EVR system on your ROS portal with Irish Revenue to bring that money home. For recoverable VAT incurred in the calendar year to 31 December 2025, related claims need to be submitted by 30 September 2026.
To avoid missing that deadline and to work to secure a VAT refund sooner rather than later, it would make sense to start the reclaim process for any recoverable VAT right away.
Warning: The September Trap
Unlike domestic Irish VAT reclaims (for Irish VAT registered persons) which have a 4-year window, EU reclaims have a hard deadline of 30 September in the following year. For instance, VAT paid in 2025 must be claimed by 30 September 2026. Missing this date usually means the right to a refund expires.
Non-EU Businesses
If you are a non-EU business which has incurred VAT in Ireland in 2025, the reclaim deadline for any claim is 30 June 2026.
Contact Us
At RBK, we can help you navigate the VAT obligations of your business. Whether related to the points above or any other VAT questions you may have, please get in touch and let us show you we can assist. It may not be rocket science, but you will know the parallel complexities.
- John Moore , VAT Associate Partner, +353 1 6440100
- Roshni Jaiswal, VAT Manager, +353 1 6440100
Disclaimer: While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, RBK do not accept any responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not intended to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.
