Top Tips on VAT if you intend to trade in RoI from Magic Beans

Magic Beansby Clare Galloway, Magic Beans

Firstly you don’t necessarily have to set up a new company in the Republic of Ireland but if you anticipate profits in Ireland or you anticipate an element of risk you may wish to consider ring-fencing this within a company structure. The rates of tax in Ireland must also be considered in determining the route you want to take.

If you are VAT registered in the UK, you will charge UK VAT even if your Irish based customer is not Irish VAT registered.

If your customer is Irish VAT registered and the goods are being exported to them for business purposes, you will verify their VAT number and business address with HM Revenue & Customs. This will then enable you to zero rate the supply and the customer will account for the VAT under the reverse charge mechanism. You must also keep evidence that the goods have been dispatched from the UK.

It is also mandatory to complete an EC sales list giving details of your Irish customers.

You should also be aware of the rules regarding distance selling i.e. selling goods directly to non-VAT registered persons e.g. mail order, catalogues, via the internet etc. Each Member State has its own distance selling thresholds and if you exceed these thresholds you are required to register for VAT in that member state and charge VAT accordingly.

The distance selling threshold for selling into Ireland is €35,000.

If your dispatch goods to VAT registered businesses in other EU Member States exceed £250,000 per annum you will need to submit monthly Intrastat returns.

VAT invoices raised by a Northern Ireland-based business can be issued in a foreign currency but you must also convert not only the value of the invoice but the VAT amount into sterling on the invoice.

If you choose to raise an invoice this way you must convert same into sterling by either

A)  using the UK market selling rate at the time of supply or B) use the period rate of exchange published by HM Revenue & Customs (also available from the National Advice Service)

Your Irish client may prefer to agree a price in euro and pay you in euro, so that they are not exposed to exchange rate fluctuations. If you want to facilitate your client, you could choose to raise your invoice in euro with the sterling equivalent shown on same or agree a euro equivalent as part of a separate contract or agreement. The disadvantage of this is that you then assume the exposure to exchange rate fluctuation.

Where you are making and receiving euro payments it is often advantageous to maintain a euro bank account. This provides the ability to net currency payments against currency receipts, thus minimising the number of foreign exchange deals that you do. Every foreign exchange deal is subject to a ‘spread’ (the difference between the bank’s buying and selling prices) thus the fewer deals you do the less ‘spread’ you pay.

Where there is considerable bias towards payments or receipts, hence minimal netting, a euro account will provide an excellent audit trail and the ability to convert currency in larger amounts which are liable to attract a better rate of exchange.

Exchange rate risk is an important consideration and should be actively managed.

If you operate through a limited company in the UK and choose to open a branch in Ireland, the branch profits will be liable to tax in Ireland (as well as in UK with double taxation relief). UK companies can elect to have their foreign branches exempt from UK corporation tax. However, the election is irrevocable. Therefore, it is extremely important professional advice should be obtained before any election is put in place.

If you would like Magic Beans to put you in touch with a tax expert or give you advice on the smartest way to send and receive international payments., email Sharon or Clare on [email protected].


*source HMRC website, Intertrade Ireland,;

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