With regard to the impact of online sales imports on the retail sector here, statistics of online retail sales are not available.
In relation to the tax treatment of online sales, the VAT treatment of a particular supply depends on the category of good or service, whether the supply is made to a business or consumer, and, particularly in the case of online sales, the location of the supplier and purchaser. In general online purchasing is made by persons registered for VAT to individuals. Online sales made by an Irish company to persons in Ireland are subject to Irish VAT in the normal manner.
With regard to goods sold online from another EU Member State, EU VAT law provides specific rules for the supply of goods between EU Member States, to determine where the goods should be taxed. In the case of goods supplied by a business in one EU Member State to a customer who is not registered for VAT in another Member State, generally the place where the goods are taxed is the place of the supplier. Therefore, a UK business supplying to a consumer in Ireland would charge UK VAT on the purchase.
However, where a business in one Member State supplies a large amount of goods to customers in another Member State, the rule of distance sales applies. Distance selling for VAT purposes occurs where a supplier in one EU Member State sells goods to a person in another EU Member State, who is not registered for VAT, and the supplier is responsible for the delivery of the goods. This includes mail order, phone and internet sales. Under the distance selling arrangements, sales to customers in other Member States who are not registered for VAT are liable to VAT in the Member State of the supplier provided that the threshold appropriate to the Member State of the customer is not breached. However, where total sales to a particular Member State exceed the threshold in any particular Member State, the supplier must register and account for VAT in that Member State. The distance sales threshold in Ireland is €35,000. This means that where the value of distance sales to unregistered persons in Ireland by a supplier in another Member State exceeds or is likely to exceed €35,000 in a calendar year, that supplier must register for VAT in Ireland and must account for VAT at the appropriate Irish rates.
With regard to online sales made by businesses located outside the EU to customers in Ireland, such goods are subject to VAT and customs duties on importation. However, the low value consignment relief provides that goods not exceeding a total value of €22 may be imported without payment of VAT. This is an administrative measure provided for under EU VAT law. In addition, goods not exceeding €150 may be imported without payment of customs duty, so that goods valued between €22.01 and €150 will qualify for relief from customs duty but VAT will still be chargeable.
In relation to quantifying the amount of taxation forgone in the State as a result on online purchase of goods from outside the State by Irish residents, tax data is not collected in such a manner as would make such statistics available. However, with regard to collecting taxes that are due in the State from online sales, I am advised by the Revenue Commissioners that they are fully aware of the potential for tax evasion as a result of eCommerce and online trading generally. Revenue's overall approach to managing compliance is to undertake a range of targeted interventions that are most appropriate for dealing with the specific risks presented in individual cases including those trading online. Their work is also supported and enhanced with appropriate technology, including their Risk Evaluation Analysis and Profiling (REAP) risk identification system and the capture of data from multiple sources. One of these sources is trading information received from merchant acquirers, which contains indicators of cases involved in internet trading.
Revenue's extensive range of measures and activities, designed to address shadow economy activity, includes exploiting the potential of new and emerging technology towards the identification of tax evasion associated with online trading and business activity.