Éamon Ó Cuív (Galway West, Fianna Fail)
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233. To ask the Minister for Finance the reason it is planned to limit VAT rebate under the retail export scheme for international visitors, non-EU, to purchases over €175 as part of the Brexit omnibus Bill; if post Brexit it will be possible to have different rules applying to UK tourists compared to other non-EU states; and if he will make a statement on the matter. [31533/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I have previously outlined the rationale for the changes proposed to the VAT Retail Export Scheme. This scheme enables visitors that are resident outside the EU to benefit from VAT relief on goods purchased in Ireland and subsequently taken outside of the EU. If the scheme applies to UK visitors post-Brexit without changes UK visitors will be able to buy goods VAT free in Ireland.

This could give rise to a considerable displacement of consumer purchases, resulting in significant VAT revenue losses, as purchases by UK visitors in Ireland would not produce any VAT revenues. Due to the volume of passenger movements between the UK and Ireland, the volume of refund applications is likely to significantly increase which simultaneously heightens the risk of abuse of the Retail Export Scheme post Brexit.

As I have previously advised, the measures in the Bill are precautionary and aim both to minimise the potential for abuse of the scheme and to reduce the possibility of diversion in retail consumption from Ireland to the UK, post Brexit.

The amended legislation proposed in the General Scheme of the Brexit Omnibus Bill 2020 provides for two elements to restrict the scheme. The first is a new requirement of proof of importation of the goods into the UK and the associated proof of payment, where applicable, of relevant UK VAT and duties, for the goods purchased under the scheme in order to qualify for a refund. The second is to provide that the value of qualifying goods must exceed €175 in value in order to be eligible for a refund under the scheme. This change is fully compatible with EU law and is in line with the EU VAT Directive. The monetary limit will apply in respect of all third country travellers who apply for a refund under the scheme, post commencement of the relevant sections.

The Ireland/Northern Ireland Protocol ensures that there will be no VAT Retail Export Scheme between Ireland and Northern Ireland. Any changes to the operation of the scheme will of course be kept under review by Revenue.