I am informed by the Revenue Commissioners that, in general, the amount of VAT and other taxes collected from internet trading is not separately identifiable as businesses are obliged to calculate and return VAT and other taxes by reference to their entire taxable activities, which includes both traditional forms of business and internet sales. Internet business includes sales to private businesses and consumers in Ireland by businesses in Ireland, other EU Member States, and from outside the EU. The vast bulk of such sales into Ireland, as with phone and mail order sales, involves small goods delivered through the postal system and the larger courier service firms.
Internet sales to Irish consumers by businesses based in Ireland are liable to VAT in the same way as other sales in Ireland and are accounted for and paid by the business concerned. Businesses based in other Member States must register and account for VAT in Ireland if their sales into Ireland exceed €35,000 in any year. Otherwise, they are subject to VAT in the Member State in which they are based and must account for and pay VAT in that Member State. Any supplier who makes distance sales of excisable goods to another Member State must register and account for VAT in that Member State, as distance sales of excisable goods are always subject to VAT and excise in the Member State to which they are dispatched.
Sales from outside the EU into Ireland are subject to VAT and customs duty on importation and Revenue maintains and operates systems and risk based controls to facilitate collection of the appropriate revenues and identify non-compliance. For example, Revenue has a Customs presence at the four An Post mail depots that receive third country mail. All non-Community mail on arrival at the depots is subject to either an external or internal examination of the goods and documents. Revenue staff raises the relevant charges, customs duty, excise and VAT, which are shown on a charge label affixed to the package and collected by the postal authority on delivery. While Revenue is generally satisfied with its existing procedures in this area, it is an area that is kept under review from both a staffing and procedural viewpoint. While there is the possibility of seizure of goods where an incorrect return or declaration is made, in practice such instances are rare for general merchandise. Practically all seizures relate to cigarettes, medicines and counterfeit products.
Non-EU businesses with any level of sales of electronic services such as computer software, music, films, games, etc to private individuals in Ireland are required to register and account for VAT. A special electronic services scheme called the VAT on e-Services System enables non-EU businesses to register in one EU Member State of their choice and account for VAT in relation to their supplies in all Member States. The resulting VAT revenues are distributed among Member States based on the distribution of sales.
Given the arrangements in place nationally and at EU level, internet business does not of itself give rise to a loss to the Exchequer. The risks lie in the potential for non-compliance in this, as in other sectors. Revenue's approach to tackling non-compliance generally is based on risk analysis, taking into account all taxes and duties relevant to the businesses and both the e-commerce and traditional economic activities of the business. This approach generates a much greater knowledge of business activities, more detailed local risk assessment and faster compliance interventions. Also, at both regional and national level, Revenue is undertaking reviews of certain business sectors, the purpose of which is to improve overall tax compliance across those sectors. In addition, Revenue is working closely with other tax administrations at EU level to share experience and develop effective operational techniques and technologies for promoting compliance in this sector.