Dan Neville
Question:49 Mr. Neville asked the Minister for Finance if he will change the rate of VAT which applies to e-shopping; and if he will make a statement on the matter. [27974/00]
Written Answers. - Tax Code.
I should explain that e-shopping can refer to physical delivery of goods ordered over the Internet and the on line supply of digital services. The current position in relation to VAT is set out below.
Goods ordered over the internet, but physically supplied from Ireland to a non-taxable person in Ireland are subject to Irish VAT. Where goods are physically supplied from another EU Member State, it is the rate of VAT in that Member State which applies. This generally applies unless the supply is subject to distance selling rules and the threshold is exceeded, is excisable goods or is a new means of transport and in such cases Irish VAT applies. Where the goods are physically supplied from a third country, Irish VAT applies unless the consignment is of a value not exceeding £36 which is sent as a gift from private individuals for the exclusive personal-family use of the recipient. Such consignments are admitted free of customs duty and VAT. In addition, packages with a value not exceeding £18 regardless of their commercial status can be admitted free of customs duty and VAT.
The on-line supply of digital products is treated as the supply of a service rather than goods for VAT purposes and the standard rate is generally applied. Where digital services are supplied from Ireland to a non-taxable person in Ireland, Irish VAT applies. Where they are supplied from another EU member state, the rate of VAT in that member state applies. Where they are supplied from a third country, no VAT applies at present.
As regards the rate of VAT on e-shopping, I should explain that the VAT rates vary according to the product or service. Thus, food products or books ordered on-line are zero rated for VAT purposes, while digital services are generally subject to the standard rate. This is consistent with an approach which applies the same rate to the same product irrespective of the way in which they are distributed. Where goods or services are standard rated, it is generally only possible to reduce the rate as part of any reduction in the overall standard rate. Where goods are sourced from outside the EU, customs obligations may also arise.
Finally, I should say that a draft EU directive on determining the new rules applicable to digital supplies was discussed at Ecofin on 27 November and all member states are anxious to resolve the issue VAT on digitally supplied services at an early date.