21% VAT Rate Change
Overview
To help the businesses on the back of Covid-19, the Irish government announced the rate of VAT will be reduced as part of the stimulus plan. The standard rate of Irish VAT will be temporarily reduced from 23% to 21% for six months, from 1 September 2020 to 28 February 2021.
The standard rate of VAT applies to approximately half of activity in Ireland and a wide range of goods and services, including the sale of motor vehicles, adult clothing, electrical goods, most household goods, many e-services, professional services and telecommunications.
There are multiple potential areas that you need to check in Surf Accounts that are listed below. We have also supplied potential solutions and introduced changes to help you manage the transition which will be referenced below.
We have deployed a 21% rate (for notional and foreign transactions too, if setup previously) for you, so you do not have to create any rates. You can simply change them where applicable i.e. on records or on defaults in Settings.
This is general guidance for all of our customers. It is up to our customers to what action to take and when. Regarding any specific advice on what you should do or how something should be treated, |
What do I need to consider?
Please see table below for different areas to consider taking action. It is up to the user when to take action, but it is advised that it is done on all areas, when starting to create transactions dated September 1, 2020 or after. The steps you need to take in each area are also provided. Click on the appropriate area to go to the steps.
| Area Affected | How | Action Needed |
|---|---|---|
| Customer/Supplier/Payee | Default VAT Rate may be set to 23% and this would be used on subsequent transactions |
Single Record: Amend default VAT Rate on individual record. All Records: Use VAT Change Wizard to update all that are 23%. |
| Orders & Quotes | VAT rates are not automatically recalculated when you convert Orders or Quote to invoices. If converted with 23%, then the invoice will have 23% | No change needed but user will need to amend VAT Rate on converted Invoice. If saving transactions with 23% during period, a warning will pop up to remind users. |
| Recurring Invoices | Recurring Invoices setup prior to change with 23%, that generate during the period, will generate with 23%. |
Single Record: Amend default VAT Rate on individual record All Records: Use VAT Change Wizard to update all that are 23% Note: This is best done after last recurrence in august and before first occurrence in September |
| Recurring Receipts and Payments | Recurring Receipts and Payments setup prior to change with 23%, that generate during the period with 23%. |
Single Record: Amend default VAT Rate on individual record All Records: Use VAT Change Wizard to update all that are 23% Note: This is best done after last recurrence in august and before first occurrence in September |
| Credit Notes | Credit Notes need to match the VAT Rate of Invoice they are being allocated against | No change needed, but user needs to select correct rate accordingly. If saving transactions with 23% during period, a warning will pop up to remind users |
| Copied Transactions | VAT rates are not automatically recalculated when you copy transactions. If original has 23%, then copied transaction will have 23% | No change needed but user will need to amend VAT Rate on copied Invoice. If saving transactions with 23% during period, a warning will pop up to remind users |
| Products | Default VAT Rate may be set to 23% for Sales and Purchases, and this would be used on subsequent transactions |
Single Record: Amend default VAT Rate on individual record All Records: Use VAT Change Wizard to update all that are 23% Note: This does not change the Nett price, it only changes the default VAT rate. |
| Bank Feed Rules | Bank Feed Rules with a 23% VAT Rate will be applied on feeds |
User amends their bank feed rules. Note: After September 1, it is advised to be mindful of the dates and rates used on all transactions on feeds, as there could be transactions for before and after September 1, meaning they would use different rates. |
| Imports | Imports that have 23% in period will be brought in with rate | User amends their imports, where applicable. |
| VAT Cash Basis | VAT is calculated when you raise the invoice, but it becomes payable on receipt. | No change needed. |
| VAT Setup | The VAT Setup will be amended from 23% for all transactions to 21%. | No change needed. |
| Applying New VAT Rates to Existing Transactions | A wizard will appear allowing you apply the changes in appropriate areas and also reverse the changes. | User needs to tick and apply the VAT rates to appropriate areas. |
| Future Dated Transactions | Future dated transactions in system from September to February with 23%, could be calculated wrong | User amends transactions dated in Future with incorrect rate. |
| Other Defaults in Settings | Zero Rated VAT Code has a notional rate typically at 23% Default Time VAT Code Quick Sales Invoice VAT Code Quick Purchase Invoice VAT Code Customer Receipt VAT Code Non Customer Receipt VAT Code Supplier Payment VAT Code Non Supplier Payment VAT Code | User Amends in Settings |