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Section 13A of the VAT Act 1972 (amended) permits businesses, whose international sales exceed 75% of their total Irish turnover, to have all of their purchases and supplies, including imports, zero-rated for Irish VAT - a major cash-flow benefit. As exports and intra-EU B2B sales are always zero-rated, companies are unable, under the EC VAT standard regime, to offset deductible input VAT suffered on purchases. They end up with VAT credits, which can take protracted periods to be issued by the Revenue, often coupled with tax inspections. With the 13A facility, the VAT credit problem is removed.
To obtain authorisation, new start companies require to provide evidence of their trading over an absolute minimum of 6 months, but more often than not, a full year, in order to satisfy the Irish Revenue of their acceptance as a qualifying person. In certain situations, supported by the IDA (Irish Development Agency) and third party accountant statements, interim authority can be obtained in advance.
Once a Certificate 13B has been authorised, following successful 13A application, the company issues copies to all of its suppliers. All qualifying supplies thereafter must be invoiced with zero VAT. This includes imports. Exceptions are passenger motor vehicles, petrol and food, drink and accommodation.
Not only resident companies can benefit from the 13A facility. It is also available to non-resident businesses. While manufacturing undertakings base themselves in Ireland, they may use marketing companies and distributors, who may have no PE (permanent establishment) presence, but who may fall within the net of VAT and Intrastat reporting. These businesses may contract to take title to goods at the factory gate, and then export them world-wide. For these concerns, the 13A licence is clearly of great value.
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