Why is there VAT on the government jet?

If it's bought in another EU country is the vat not paid there.
If I buy something from France for delivery to Ireland, vat is paid at the time of purchase.
 
S class said:
If it's bought in another EU country is the vat not paid there.
If I buy something from France for delivery to Ireland, vat is paid at the time of purchase.
Click to expand...
Not if you are a business, would be an Intra Community Supply and zero rated . So maybe the Dept of defense is not a business but then they should use an Irish vat registered broker who will charge them vat that will be paid to Revenue. So still no net Vat cost as I see it.
 
The purchasing body pays VAT to Revenue. So it comes out of te Department's budget but it's not a net cost to the taxpayer.

It's an accounting exercise essentially.
 
Dr Strangelove said:
No it doesn’t because the Department of Defence is a public body outside the scope of VAT for the purchase of military aircraft.
Click to expand...
Fair enough. That's how it works for most purchasing bodies though. I've never really understood why money was shuffled around the books that way, but it is.
 
SquirrelChaser said:
Fair enough. That's how it works for most purchasing bodies though. I've never really understood why money was shuffled around the books that way, but it is.
Click to expand...
It’s not really. Spending and revenuw are pretty segmented at national level. Giving Departments credits for VAT paid would introduce complexity.

Also VAT is an EU tax so for all sorts of reasons it has to be treated the same in Ireland as everywhere else.
 
VAT isn't my strong point. But it leaves one government bank account and goes straight to another government bank account. Payment of VAT at the applicable rate is required under the standard suite of contracts for supply of works, goods, and services to the public sector.

The net effect is near-zero (obviously there's transaction costs which I'd guess would be a fraction of 1% which I would not consider significant in this context).

As to the why, @Dr Strangelove seems to be more familiar with this than me, but what he says about introducing complexity does make a certain amount of sense, in that special rules for Departments/State Bodies and so forth would probably require more specialised accounting packages etc etc for Government clients as compared to the somewhat configurable but largely off-the-shelf trash packages that are used, and the costs would probably outweigh any marginal benefit.
 
torblednam said:
Are you sure about this?
Click to expand...
This the Perplexity answer for whether intra-community purchases of military equipment are subject to VAT.

For intra-community purchases of equipment by national military forces in the EU, VAT is generally handled under the reverse charge mechanism. This means:
1. Exemptions for Military Activities: Purchases for EU Common Security and Defence Policy (CSDP) operations or NATO joint defense activities may qualify for VAT exemptions or refunds, provided the goods are used outside the purchasing country.
2. Reverse Charge: In standard intra-community acquisitions, VAT is not charged by the supplier but self-accounted by the purchaser in their country. The military would declare and deduct VAT simultaneously, resulting in no net VAT payable if eligible.
Click to expand...

It’s a bit more complicated than my original understanding but the net effect is no VaT paid by Department of Defence to Revenue or by the vendor to the French fiscal authority.
 
An important subject for when AAM declares itself an independent state and needs to purchase a jet :)

(not trying to belittle the OP's question, just that it is one of the more unexpected ones we've had over the years)
 
You must log in or register to reply here.
Back
Top