Ireland VAT Increase from 21% to 23% on 1st March 2021

This VAT rate change affects only companies based in Ireland. UK companies are not affected.

The standard rate of VAT in Ireland increases back from 21% to 23% for all invoices raised on or after the 1st of March 2021.

As some tasks can be take some time to do manually, we have written a program to automate these steps which is available to purchase if required (contact our helpdesk). The steps that can be automated with this program are shown marked with ***.

Some tasks listed are optional (marked @@@). If you wish to carry out any of these optional items, we have additional programs available to automate these tasks, available to purchase from our helpdesk if required.

The steps you should go through for this VAT rate change are as follows:-

(A) After entering all sales orders for the period up to the end of February 2021 and after running the Sales and Product Month End Update procedure:-

1. Change the default sales VAT code for each product group that is currently at 21% to the 23% VAT code. This can be done using the EDIT program in the Products – Utilities – Product Groups section. ***
2. Change the VAT rate on live sales orders. You should change the VAT rate associated with all live sales order lines so that when the invoice is raised the new VAT rate will be used. Note: for RETAIL order lines, the selling price to the customer will stay the same – it will be your margins that will change. ***
3. Change quote line VAT rates (ONLY APPLIES IF YOU USE THE QUOTES MODULE). You should change the VAT rate associated with outstanding sales quote lines so that when they are turned to firm orders the new VAT rate will be used. Note: for RETAIL quote lines, the selling price to the customer will stay the same – it will be your margins that will change. ***
4. (OPTIONAL) Invoice sales deposits paid against live orders in February at the old VAT rate. ONLY APPLICABLE TO RETAILERS WHO WANT TO INVOICE ALL DEPOSITS IN FEBRUARY AT THE OLD VAT RATE. You should add a “deposit” item at the old VAT rate to each live sales order for the value of deposit paid, invoice them as February and reduce the order value of lines still in progress by the deposit amount. @@@
5. (OPTIONAL) Invoice all live sales orders in February at the old rate. ONLY APPLIES TO RETAILERS WHO WANT TO INVOICE ALL SALES ORDERS NOW AT THE OLD VAT RATE. You should add a “whole order” item at the old vat rate to each live sales order for the full order value, invoice them as February and reduce the order value of all sales order lines to zero. @@@
6. (OPTIONAL) Increase live sales order values by the difference between the old and new VAT rates. ONLY APPLIES TO RETAILERS WHO WANT TO INCREASE THE SELLING PRICE OF LIVE ORDERS. You should change the “including VAT” selling price on existing live sales orders up slightly. Most people will not wish to do this. @@@

(B) Change the default VAT code associated with each supplier whose VAT code is 21% to 23%. This should be done when the majority of purchase invoices to be entered into the system are for the new rate (likely to be in a couple of weeks) but can be done sooner. This can be done using the EDIT program in the Accounts – Supplier – Maintenance section. ***

(C) Change the default VAT rate associated with Nominal Ledger accounts. You should change the default VAT rate associated with your nominal ledger accounts that are currently at the old VAT rate to the new VAT rate. This should be run when the majority of nominal ledger postings to be entered into the system are for the new VAT rate (likely to be in a couple of weeks). This can be done using the EDIT program in the Accounts – Nominal – Maintenance section.  ***

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If you have any queries about this VAT change, please email software@optimisesupport.co.uk or call our helpdesk.