Legislation change to the VAT3 form

By Darren Bracken, L & D Product Trainer & Coach at Sage

VAT registered businesses submit their VAT3 form at various times throughout the year.  The main thing is that all VAT registered businesses at some point in the year submit a VAT3 form. Customer feedback indicated a lack of awareness around this new change which was quiet surprising. It is the first major change in the way we calculate our return since the introduction of RCT (Relevant Contracts Tax) in 2008.

How has the legislation changed?
In previous years businesses have always reported on goods and services to and from other EU countries within the E1 and E2 boxes on the VAT 3 form. From the 1st of March 2013 all businesses must now report on goods and services separately.

  • Goods to other EU countries must be accounted for in E1
  • Goods from other EU countries must be accounted for in E2
  • Services to other EU countries must be accounted for in the new ES1 box
  • Services from other EU countries must be accounted for in the new ES2 box

For a breakdown of each field in the VAT3 form visit: http://www.revenue.ie/en/tax/vat/charging/index.html

Does it affect you?
In the majority of cases businesses will deal with sales or purchases of goods and services to other countries more specifically other European countries including our neighbours in the UK.

  • Services exports grew by 11% last year to a staggering €90.2 billion consolidating Ireland’s position as the 9th largest global exporter of services.
  • 35% of this €90.2 billion was exported to other EU countries, according to the Year End 2012 Export Industry Review from the Irish Exporters Association (IEA).
  • According to the IEA services exports account for 49% of total exports in Ireland.

These figures reinforce the fact that this change is huge and will impact the majority of Irish businesses at some point throughout the year. So if you are a business that trades in both goods and services with other EU countries or just services alone then this change does affect you.

Did you know?
Services exports are expected to exceed goods exports in the coming year.
Despite the recent shrinking of the manufacturing and exporting sectors, the Irish economy is set to grow this year mainly due to the rise in services exports.
Revenue can impose fines of up to €950 to a body that files an incorrect return.

Sage 50 Accounts 2014 – The VAT Edition allows you to account for the change in ES1 and ES2. For more information on Sage 50 2014 take a look at this video.

Darren Bracken

Trainer at Sage Ireland

Darren Bracken is as an internal trainer for Sage Ireland. Prior to his work as a trainer he worked in technical support for two years specialising in Sage 50, Sage Quickpay and Sage Micropay products.