VAT Matters – August 2025 – The Latest EU and Irish VAT developments

In VAT Matters this month, David Duffy discusses a Court of Justice of the European Union (“CJEU”) judgement in relation to the VAT exemption available for re-imported goods and updated Revenue guidance regarding waivers of exemption, the EU VAT SME Scheme, and the VAT treatment of admission to events.

VAT exemption for re-imported goods

The CJEU delivered its decision in Palmstråle in relation to the VAT exemption for goods re-imported to the EU. The case concerned a Swedish taxpayer who exported racehorses to a location outside the EU (Norway) for competition and re-imported them into Sweden without declaring them at the border. Although no customs debt was formally due, the Swedish Customs Authority imposed import VAT on the re-importation of the horses to Sweden on the basis that certain customs formalities had not been complied with.

The referring court asked the CJEU to consider whether failure to comply with procedural customs obligations (such as presenting goods at the border or submitting a customs declaration) precludes entitlement to the VAT exemption available for re-imported goods, even where the substantive conditions for VAT exemption are met.

The Court held that VAT exemption cannot be denied solely due to a procedural customs breach, provided that:

  1. The substantive conditions for VAT exemption are met (i.e., the goods are reimported in the same state and by the same person who exported them).
  2. There is no fraud, abuse, or risk of tax loss.
  3. The breach does not result in a customs debt under the Union Customs Code.

Waiver of exemption

On 23 June 2025, Revenue eBrief No. 124/25 updated the Tax and Duty Manual (“TDM”), “Waiver of exemption – Transitional Measures”, to confirm that Revenue will no longer seek to collect “waiver cancellation amounts” when a waiver of exemption is cancelled. This change, effective from 20 December 2024, follows the High Court’s decision in Killarney Consortium v. The Revenue Commissioners [2024] IEHC 732, which found that waiver cancellation provisions are incompatible with EU VAT law.

By way of background, under the old VAT on property rules in place before 1 July 2008, landlords could waive the VAT exemption on short-term property lettings (lettings under 10 years) before 1 July 2008 allowing them to reclaim VAT on related costs. However, if the waiver was later cancelled, they were required to repay the excess VAT reclaimed over the VAT actually charged on the letting/sale of the property (if any). This cancellation amount was often a significant sum, especially after the property market downturn after 2008. Although no new waivers could be exercised after 1 July 2008 (as new VAT on property rules became effective from that date), existing waivers continued to apply, and the cancellation provisions remained in force. The High Court decision and updated TDM is therefore a welcome change for taxpayers owning properties subject to a waiver.

Businesses which still have or have recently cancelled a waiver may therefore wish to review their position.

EU VAT SME Scheme

Revenue eBrief No.113/25 published a new TDM called “Guidelines for Cross-border Operation of EU VAT SME Scheme (VSME)”.

Effective from 1 January 2025, the SME scheme introduced a simplified VAT regime for SMEs operating cross-border throughout the EU, aiming to reduce the administrative burden and compliance costs for EU established SMEs.

Under the SME scheme, eligible businesses can supply goods and services to customers in another EU Member State without having to register for VAT in that other Member State in circumstances where a VAT registration would otherwise normally be triggered.

To qualify, the SME must be established in the EU and its total annual turnover across all EU Member States must not exceed €100,000 in the current annual year and the previous annual year. Once qualified, the SME can avail of the domestic annual VAT registration thresholds in the relevant Member States in which it is making cross-border supplies.

Previously, where a non-established trader made supplies in another EU Member State, there was no de minimis threshold.

The TDM provides an overview of the SME Scheme, as well as guidelines on the registration process and quarterly reporting obligations under the scheme.

Admission to Events

Revenue eBrief No. 127/25 published a new TDM to provide guidance on the “VAT Treatment of Admission to events”. The guidance outlines the new place of supply rules for online or virtual events which came into effect on 1 January 2025.

While physical (in person) events continue to be taxed where the event takes place, since 1 January 2025, admissions to virtual events are to be taxed where the customer is located. As such, the provision of virtual events may create local VAT accounting obligations for suppliers providing virtual events on a business to consumer (“B2C”) basis (although this VAT may be remitted through the one stop shop (“OSS”)).

The guidance confirms that suppliers of hybrid events (i.e. events with both physical and virtual elements) should consider the rules regarding composite and multiple supplies, but where the provision of physical and virtual elements of the event are balanced, the event should be treated as a physical event.

Finally, the guidance confirms that pre-recorded virtual events should be treated as an electronically supplied service for VAT purposes (which are also subject to VAT where the customer is located).

eBrief No. 127/25 also updated the TDM in respect of the “VAT treatment of Education and Vocational Training” to confirm that conference registration fees should be treated as an admission to an event and suppliers of such fees should refer to the new TDM in respect of same.