Postponed Accounting in Ireland: Import VAT on Your VAT3 Return

 

Postponed accounting allows an Irish importer to declare and reclaim import VAT on the same VAT3 return rather than paying it at the point of importation and recovering it later. On a consignment with a customs value of €100,000, that timing difference keeps roughly €23,000 of working capital inside the business instead of with Revenue.

There is no separate application or approval process. Postponed accounting is available to businesses registered for VAT and Customs and Excise, provided they continue to meet Revenue’s conditions.

What is postponed accounting for import VAT?

Goods acquired from outside the European Union VAT area are treated as imports, and since Brexit that has included goods bought from Great Britain. Import VAT is normally payable when the goods arrive.

Postponed accounting removes that payment at the border. The VAT is recorded on the VAT3 return as VAT charged on a sale and VAT deducted on a purchase at the same time, in the way intra-community acquisitions have always been recorded. Where the importer has full deductibility, the two entries cancel and the net cash effect is nil.

The obligation sits with the consignee (the importer), and does not transfer to a customs broker or freight agent, even where the agent files the declaration.

Who can use postponed accounting in Ireland?

Any accountable person in Ireland acquiring goods from outside the EU VAT area may use it. Businesses registered for VAT and for Customs and Excise at 11pm on 31 December 2020 received automatic entitlement and were never required to apply.

A business that is registered for VAT in Ireland but not for Customs and Excise has to complete that registration and obtain an EORI number before it can import at all, after which entitlement follows automatically. That registration is the step that decides whether postponed accounting is available, which is why common EORI problems tend to surface as import VAT problems a month or two later.

Nathan Trust handles VAT and Customs and Excise registration together for businesses setting up import operations in Ireland, so the EORI number and the entitlement are in place before the first consignment ships.

How to record postponed accounting on your VAT3 return

The VAT3 return carries a mandatory PA1 field. PA1 takes the customs value of the goods imported under postponed accounting as declared on the customs declarations, plus customs duty. Zero-rated goods belong in PA1 as well, provided postponed accounting was applied on the declaration.

Take a distributor importing machinery with a customs value of €100,000 and paying €5,000 in customs duty. PA1 is €105,000. VAT at 23% on that amount is €24,150. That figure goes into T1 and, assuming full deductibility, into T2 as well, so nothing is paid and nothing is reclaimed.

Without postponed accounting, the same importer pays €24,150 at the border and recovers it through the VAT3 for that period, due by the 23rd of the month following the two-month period. Goods landing early in a period can leave that money with Revenue for close to three months.

Which fields does the Return of Trading Details use?

The RTD carries a postponed accounting field on each of the three purchase screens in ROS. All three are calculated on the same basis as PA1.

Each PA field should equal the total of the postponed accounting figures entered across the VAT rate fields on that screen. Nathan Trust prepares the VAT3 and the RTD together for import clients, because a PA1 figure that doesn't reconcile to PA2, PA3 and PA4 is a common trigger for Revenue contact.

How is postponed accounting claimed on the customs declaration?

Postponed accounting is applied declaration by declaration, through a code entered when the declaration is filed.

Under AIS version 1 that code was 1A05, entered in data element 2/3. AIS version 2, which includes Customs Control Import, replaced it with the code FR7. FR7 goes in data element 13 16 000 000, the Additional Fiscal Reference, together with the Irish VAT number of the importer.

The code has to be on the original declaration. Revenue does not permit postponed accounting to be claimed by amending a declaration afterwards, so a consignment cleared without the code has its import VAT paid at the border and recovered in the ordinary way.

When should you not use postponed accounting?

Postponed accounting is not compulsory, and three situations call for something else.

A business authorised under section 56 of the Value-Added Tax Consolidation Act 2010 should never use it. Section 56 authorisation allows qualifying goods to be imported at the zero rate, and that authorisation is declared on the import declaration instead.

Goods moving from Northern Ireland are not imports. Northern Ireland remains inside the EU VAT regime for goods under the Protocol, so trade in goods with Northern Ireland continues as it did before and postponed accounting has no application to it.

An importer that prefers to pay may use the deferred payment system, which defers customs duties and import VAT to the 15th of the month following importation. That is a shorter deferral, and it still involves a payment.

Can Revenue remove your entitlement?

Yes. Continued entitlement depends on the conditions in the Value-Added Tax Regulations 2010 (Regulation 14A) (Amendment) Regulations 2020, and Revenue can ask an importer to demonstrate compliance at any point.

The importer must:

• be compliant with the VAT Consolidation Act 2010, the Tax Acts, the Capital Gains Tax Acts, the excise statutes and the Customs Act 2015
• keep full and true records under section 84 of the VAT Consolidation Act 2010
• not have been convicted of an offence under those Acts

On request, Revenue may also seek business addresses, information on solvency and financing, detail on the goods supplied, audited accounts and a tax clearance certificate. A security bond may be required separately under section 109.

Where an importer fails to demonstrate the capacity and capability to account for the tax on an ongoing basis, Revenue serves a Notice of Exclusion, effective from the date stated in it. Reinstatement can be requested through MyEnquiries on ROS once the reasons have been corrected, and the notice may be appealed to the Tax Appeals Commission within 30 days. Entitlement stays suspended until the Commission determines the appeal. Nathan Trust answers Revenue queries on the Regulation 14A conditions for import clients, and the 30-day window is short enough that the response needs to be ready before the notice arrives.

How does Ireland compare with the rest of the EU?

Postponed accounting is a national measure rather than a single EU scheme, and the terms vary by member state. The table provides a high-level comparison only. Eligibility conditions and procedures can change, so local advice should be obtained before selecting an import jurisdiction.

Ireland’s application-free postponed accounting regime can be an important cash-flow consideration for UK and other non-EU businesses assessing an Irish import and distribution structure. The appropriate structure will also depend on customs, VAT, commercial substance and supply-chain considerations. EU VAT registration in Ireland usually sits alongside that decision, and sellers shipping consignments valued at €150 or less often pair it with the Import One Stop Shop, which requires an IOSS intermediary where the seller is established outside the EU. For goods already inside the EU, Union OSS and non-Union OSS handle the cross-border VAT instead.

Nathan Trust has built this structure for a number of UK retailers, set out in our case study on UK retailers using Irish IOSS registration.

Working with Nathan Trust

Nathan Trust registers businesses for VAT and Customs and Excise in Ireland, obtains the EORI number, prepares and files the VAT3 and the Return of Trading Details, and checks declarations to confirm the postponed accounting code was applied.

Our wider guidance on VAT in Ireland covers registration, rates and filing obligations. To discuss an import structure, talk to our VAT team.

Frequently asked questions

Do I need to apply to Revenue for postponed accounting?

No. Entitlement is automatic once a business is registered for VAT and for Customs and Excise, and Revenue operates no application or approval process.

Do I need an EORI number to use postponed accounting?

Yes. A business cannot import without Customs and Excise registration and an EORI number, and that registration is what confers the entitlement.

Does postponed accounting apply to goods from Northern Ireland?

No. Northern Ireland stays within the EU VAT regime for goods, so movements from Northern Ireland are not treated as imports.

Is postponed accounting the same as a deferred payment account?

No. Deferred payment postpones payment to the 15th of the month following importation. Postponed accounting removes the payment altogether, subject to the usual rules on deductibility.

Can I claim postponed accounting after the declaration has been filed?

No. The code must be on the original declaration, and Revenue does not allow the claim to be added by amendment.