Ireland Announces COVID Concessions

By Global Tax Weekly

The Irish Revenue has issued guidance on the tax treatment of the supply of emergency accommodation and the donations of gifts of goods or meals supplied in response to the COVID-19 crisis, outlining the application of the Capital Goods Scheme (CGS) to emergency accommodation. The CGS is a mechanism for regulating the amount of VAT reclaimed over the VAT-life, and aims to ensure that the VAT reclaimed reflects the use to which the property is put over its VAT-life.

Revenue said that, as a concessionary treatment, it will not apply the CGS “big swing” adjustment in cases where the change in the proportion of deductible use is a consequence of a capital good being diverted for use as emergency accommodation.

The guidance also explained the VAT treatment of donations of gifts of goods and meals. Generally, where a business donates goods free of charge, no VAT charge will arise on the donation where the value is less than EUR20. For goods in excess of EUR20, the self-supply rule applies, and for goods where no VAT was reclaimed by the business on the input costs relating to those goods those supplies are considered outside the scope of VAT.

Revenue said that where a business donates certain goods free of charge to the HSE (Ireland’s health service), hospitals, nursing homes, and other healthcare facilities for use in the delivery of COVID-19-related health care services, those supplies will be considered to be self-supplies and will be liable to a temporary zero rate of VAT.

Where a business donates hot meals free of charge to charities and health care providers involved in the response to the crisis, Revenue will concessionally disregard those supplies for the purposes of determining the business’s entitlement to deductibility. Where a business donates food products and non-alcoholic drinks free of charge, Revenue will concessionally not require the business to apply the normal self-supply rules and will allow the business to maintain an entitlement to deductibility in respect of those donations.

This concessional treatment will apply from April 9, 2020, to July 31, 2020, and will be subject to review, Revenue explained.

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