Posted by Revenue eBrief No. 077/20
The application of the Capital Goods Scheme and the VAT treatment of Donations or Gifts of goods or meals
PDF update (updated May 2020)
Extracts and highlights are shown below. Review the full PDF for all details:
1.Introduction
Following a request from the Minister for Finance and Public Expenditure and Reform, Revenue will allow the application of the zero rate of VAT to the supply to the HSE, hospitals and other health care settings of personal protection equipment and medical equipment for use in the treatment of patients with Covid-19. In addition, the tax treatment of the supply of emergency accommodation is clarified. Details of this temporary concession are set out below.
2.Covid-19 temporary VAT zero-rating measure Revenue will permit the zero rate to apply to the supply and intra-Community acquisition of the goods listed below when supplied to or acquired by the HSE, hospitals, nursing homes, care homes, GP practices and the like, for use in the delivery of COVID-19 related health care services to their patients:
•personal protection equipment(PPE)
•thermometers
•hand sanitiser
•medical ventilators and specialist respiratory equipment such as respirators for intensive and sub-intensive care and other oxygen therapy apparatus including oxygen tents
•oxygen.
The zero rate may onlybe applied to supplies to hospitals, nursing and care homes, GP practices and the like; supplies to any other operators even if they are intended for onward supply to a health care provider are liable at the standard rate.
3.Timeline for the Covid-19 temporary VAT zero-rating measure
This concessional treatment will apply from 9 April 2020 up to 31 July 2020, subject to review.
4.What records should suppliers maintain?
5.Deductibility
6.Other medical products that are zero rated
6.1.Medical devices
Generally, most medical devices are liable to the standard rate of VAT. The following goods are already zero rated for VAT purposes as per paragraph 11(3)(b) and (c) of the Second Schedule to the Value-Added Tax Consolidation Act, 2010:
•Tracheostomy tube
•Endotracheal tube
•Breathing filters (that are solely or principally for use with tracheostomy or endotracheal tubes).
6.2.Human oral medicines
Human oral products which are licenced or authorised as medicines by the Health Products Regulatory Authority (‘HPRA’) are zero rated as per paragraph 11(1) of the Second Schedule to the Value-Added Tax Consolidation Act, 2010.3
7.Emergency accommodation
7.1 Application of the Capital Goods Scheme to emergency accommodation
8. Donations or gifts of goods and meals
Generally, where a business donates goods free of charge, no VAT charge will arise on the donation where the value is less than €20; for goods in excess of €20 the self-supply rule applies; for goods where no VAT was reclaimed by the business on the input costs relating to those goods those supplies are considered outside the scope of VAT. Further information on the VAT treatment of the supply of gifts is available in VAT on Gifts and Promotional Goods/Schemes.
Where a business donates goods as specified in Paragraph 2 free of charge to the HSE, hospitals, nursing homes, and other healthcare facilities for use in the delivery of Covid-19 related health care services to their patients, those supplies are considered to be self-supplies and liable to the temporary zero rate of VAT.
Where a business donates hot meals free of charge to charities and health care providers involved in the response to the Covid-19 crisis for distribution to vulnerable groups or for consumption by frontline staff, Revenue will concessionally disregard those supplies for the purposes of determining the business’s entitlement to deductibility.
Where a business donates food products (including cold food takeaways) and non-alcoholic drinks free ofcharge to charities and health care providers involved in the response to the Covid-19 crisis for distribution to vulnerable groups or for consumption by frontline staff, Revenue will concessionally not require the business to apply the normal self-supply rules and will allow the business to maintain an entitlement to deducibility in respect of those donations.
This concessional treatment will apply from 9 April 2020 up to 31 July 2020, subject to review.
Bookkeepers Ireland 