Christopher O'Sullivan (Cork South West, Fianna Fail)
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93. To ask the Minister for Finance if he will consider a reduction in the VAT rate to 21% on goods to help small and medium enterprise businesses compete against online shopping outlets. [9115/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that where a business is established in the State and supplies goods online to Irish customers VAT is chargeable at the same rate as applies to the sale of similar goods in a shop.  In general, sales of goods by traders in other EU member states to Irish customers are subject to the same rate of VAT as domestic sales of goods where the value of the sales to Irish customers by that trader exceeds the Irish distance-selling threshold of €35,000 in any year; otherwise the VAT rate applicable in that EU trader’s Member State applies. Equally, Irish traders selling goods to private customers in other EU Member States may apply Irish VAT unless they exceed the distance selling threshold for that Member State. Subject to certain exclusions, goods purchased online and imported from non-EU countries are subject to Customs duty and VAT at the point of importation. The rate of VAT is the same as if that good had been supplied in the State.

As the Deputy may be aware, an exemption from VAT already exists for small business who sell goods. Where their turnover does not exceed or is unlikely to exceed €75,000 in any continuous 12-month period, they are not required to register for VAT or charge VAT on their supplies.

It is important to note that any reduction in VAT rates incurs a cost to the exchequer, which would necessitate recovery elsewhere.

Éamon Ó Cuív (Galway West, Fianna Fail)
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94. To ask the Minister for Finance if he will consider raising the threshold over which companies are required to register for VAT from €35,000 to €50,000 to reduce the cost of administration for small businesses; and if he will make a statement on the matter. [9172/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by the Revenue Commissioners that VAT is governed by the EU VAT Directive (Council Directive 2006/112/EC), with which Irish VAT law must comply. The Directive provides that VAT registration thresholds may only be raised by Member States to maintain their value in real terms, that is, they may only be increased in line with inflation. Our VAT thresholds were increased to their current values, €37,500 for services and €75,000 for goods, on 1 May 2008 and as the Central Statistics Office figures show the consumer price index is below the level it reached in 2008, it is not possible to increase these thresholds.

Ireland’s VAT registration thresholds for small enterprises and the self-employed are among the highest in the EU. In addition, SMEs benefit from a range of VAT simplification measures including simplified and electronic invoicing, special schemes for retailers and pharmacists, the facility to make VAT returns on a bi-annual or annual basis, the cash receipts basis of accounting where the trader is not required to pay VAT until payment for the supply is received, the facility for small businesses to submit an annual VIES return rather than monthly and the Mini One Stop Shop which allows business to register, file and pay VAT due in all Member States through the Irish MOSS system.