Michael McGrath (Cork South Central, Fianna Fail)
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The VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. The Directive also permits Member States to apply a zero-rate to particular categories of the goods and services specified in Annex III, and these include books and electronic publications.

In accordance with the Directive, Ireland has applied the zero rate of VAT to physical books for many years. In Budget 2024, I announced that electronic books and audiobooks will also move to the zero rate with effect from 1 January 2024; the legislative provision to enable this is in Finance (No.2) Bill, which is currently moving through the Oireachtas.

Under the VAT Directive, where goods or services are purchased from another country, the “place of supply rules” are used to determine where the supply is liable to VAT. A number of factors may need to be taken into account when determining the place of supply, including whether the purchase relates to goods or to services, whether or not the purchaser is VAT-registered, and whether the supplier is based in another EU Member State or in a third (i.e. non-EU) country. Further considerations may apply if a supply is made online or via distance sales. Ultimately, if the place of supply is determined to be Ireland, then it is generally the Irish VAT rules (including rates) which apply to the transaction. The measure I announced in the Budget does not involve any change to the application of the place of supply rules.

In relation to online purchases by an Irish consumer from a business in another country, in general, if the purchases are physical books, then the matter is treated as a supply of goods and the 0% rate will generally apply. If the purchases are electronic books, then the situation is regarded as the supply of services and, in the given circumstances, in general the place of supply would be Ireland and the transaction will generally come within the scope of Irish VAT which, from 1 January 2024, will apply the 0% rate to the supply of ebooks. In both cases, if the supplier is an EU business that makes less than €10,000 of intra-EU supplies to private individuals annually, then the rate in the supplier’s Member State may apply instead.

Revenue have published extensive guidance on the existing rules in relation to printed matter, books and electronic publications; this guidance will be updated very shortly to take account of the VAT rate change for audiobooks and e-books when the legislation is enacted. Revenue also provide guidance on place of supply rules. There is a short guide for consumers buying goods online available from Revenue at www.revenue.ie/en/customs/individuals/buying-online-personal/index.aspx .