Circular 24/2026: Why Public Bodies Can No Longer Let Infrastructure Speak for Itself

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Circular 24/2026: Why Public Bodies Can No Longer Let Infrastructure Speak for Itself

Major infrastructure projects are often judged by what they cost and when they are delivered. Circular 24/2026 shifts the focus towards a different question: whether those investments deliver the benefits they were intended to achieve.

From 1 July 2026, public bodies involved in infrastructure projects are encouraged to take a more structured approach to benefits realisation and communication. The Circular introduces the Benefits Realisation Framework for Infrastructure, which builds on the existing Infrastructure Guidelines by placing greater emphasis on demonstrating that projects deliver their intended benefits throughout the project lifecycle.

What Does Circular 24/2026 Mean in Practice?

In practical terms, the Circular requires public bodies to apply the Benefits Realisation Framework throughout the lifecycle of infrastructure projects and in their public communications about those projects.

This means that:

  • Public-facing descriptions of project benefits must be derived from, and remain consistent with, the benefits identified in project appraisal documentation.
  • Public bodies should work collaboratively from an early stage of the project to ensure technical, policy and communications teams present a clear and consistent account of:
    • a project’s expected benefits; and
    • the consequences of delay or non-delivery.

Applying the Benefits Realisation Framework

The Benefits Realisation Framework supports the Infrastructure Guidelines by seeking to ensure that the benefits identified during appraisal are actively managed and assessed across all stages of a project.

In practice, this means public bodies will need to consider:

  • The economic, social and environmental benefits expected from a project.
  • How those benefits will be measured and monitored.
  • Who is responsible for tracking and reporting on benefits.
  • How the benefits of investment will be explained clearly to stakeholders and the public.
  • The consequences of delay, disruption or non-delivery.

A notable feature of the Framework is the emphasis on the consequences of delay or non-delivery. Public bodies are encouraged to consider not only the benefits of proceeding with a project, but also the economic, social and service impacts that may arise if investment is postponed or abandoned. These impacts could include reduced service capacity, continued infrastructure constraints or missed economic opportunities. The Framework also emphasises accountability by encouraging public bodies to identify who is responsible for ensuring that a project’s expected benefits are realised and reported on.

What Does This Mean for Public Bodies?

The key message of Circular 24/2026 is that infrastructure should not have to speak for itself. Public bodies should be prepared to explain not only the benefits that an investment is expected to deliver, but also the consequences of delay or non-delivery. In doing so, they will need to demonstrate how infrastructure investment supports wider economic, social and environmental outcomes for the communities it is intended to serve.

If you would like to discuss how Circular 24/2026 may affect your organisation, please contact Crowleys DFK’s Risk Consulting team.

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Capitalising Software Costs: Are You Getting It Right?

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Capitalising Software Costs: Are You Getting It Right?As more public sector bodies invest in new software systems, we are increasingly being asked whether these costs should be capitalised or expensed. The OCAG Technical Bulletin on Intangible Assets and CGAS 31 provide useful guidance in this area. The OCAG bulletin focuses on the accounting treatment of software hosted on the cloud, while CGAS 31 highlights the distinction between research and development costs. Together, they point to two key questions finance teams should consider:

  • Does the arrangement create an intangible asset or is it a SaaS contract?
  • Is the expenditure research or development in nature?

1. Does the arrangement create an intangible asset or is it a SaaS contract?

When advising clients, we first consider whether the organisation owns or controls the software asset. A growing number of public sector bodies are adopting Software as a Service (SaaS) arrangements, whereby the body pays a fee in exchange for access to software hosted and controlled by the supplier. In a SaaS arrangement, costs generally cannot be capitalised as the organisation is paying for access to software owned by the supplier rather than owning the software outright.

However, where a SaaS arrangement does not exist and the organisation controls the software, only costs directly attributable to preparing the software for use can be recognised as an asset. Determining which costs qualify requires consideration of the expenditure incurred. In our experience, the distinction between SaaS arrangements and software that creates an intangible asset is one of the most common areas of confusion.

2. Is the expenditure research or development in nature?

CGAS 31 requires organisations to distinguish between research and development activities when assessing software project costs. Costs incurred during the research phase, such as assessing needs, evaluating alternatives and determining feasibility, are treated as an expense. Development costs, such as software configuration, customisation, integration and testing, may qualify for capitalisation where they are directly attributable to preparing the software for use. Training, promotional activities and general administration costs are generally charged as an expense when incurred.

A Practical Example

A public sector body is implementing a new grants management system to help collect applications, notify applicants and manage payments. During the project, it incurs the following costs:

  • €400,000 on software configuration and customisation
  • €150,000 on system integration and testing
  • €50,000 on staff training

In this case, the configuration, customisation, integration and testing costs would generally qualify for capitalisation as they are directly related to preparing the system for use. The training costs, however, would be expensed. As a result, €550,000 may be recognised as an intangible asset, while €50,000 would be charged to expenditure.

Key Considerations

In summary, before deciding whether software costs should be capitalised, public sector bodies should assess:

  • Whether the arrangement creates an intangible asset or is simply a SaaS contract; and
  • Whether the expenditure relates to research activities or the development of the software.

It’s important to get these assessments right, as they can have a significant impact on both reported results and the value of assets shown in the financial statements.

If you would like advice on the treatment of software project costs, contact David Coombes, Partner in our our Public Sector & Government Services team.

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Rising Cyber Risk During Ireland’s EU Presidency

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Rising Cyber Risk During Ireland’s EU PresidencyIreland’s upcoming Presidency of the Council of the European Union, beginning on 1st July 2026, represents a significant milestone but will also bring a substantial increase in sensitive communications, intergovernmental engagement, and public-facing digital activity. Set against ongoing geopolitical tension, this expanded digital footprint will heighten Ireland’s exposure to hostile cyber activity.

Lessons from Recent EU Presidencies

Recent EU Presidencies demonstrate that these risks are both real and continuing to evolve. Denmark’s Presidency in 2025 faced repeated cyberattacks on government and defence systems, including DDoS campaigns that temporarily disrupted public websites. In one instance, pro-Russian actors targeted government and political party platforms ahead of local Danish elections.

Cyprus experienced both DDoS activity and coordinated disinformation under its Presidency; one such case involved a manipulated video alleging corruption, later deemed falsified, but which caused significant political fallout.

At the same time, state‑aligned actors continue to pursue strategic intelligence. In May 2025, the Czech government attributed a cyberattack on its foreign ministry to the Chinese state-sponsored group APT31. The campaign, which began in 2022 during Czechia’s EU Presidency, enabled unauthorised access to unclassified emails exchanged between embassies and EU institutions.

Risks at Major EU Events

The National Cyber Security Centre (NCSC) has warned that attacks during the Presidency may focus not only on disrupting services but also on damaging the reputation of Ireland and the EU. Risk is expected to peak around major events, including European Council meetings and the European Political Community summit in November, where even short-lived outages, such as website or accreditation system failures, could undermine confidence.

Cross-Sector and National-Level Exposure

The risk also extends beyond central government. Ireland’s concentration of global technology firms, financial services, and critical infrastructure broadens the target base and raises the risk of cross-sector disruption. A more expansive scenario could involve simultaneous attacks on government systems, cloud services, financial platforms, and telecommunications networks. Given Ireland’s role in global data flows, such incidents could also have wider international effects.

Specific risks include:

  • Disruption to cloud and remote access points,
  • Interference with ICT and financial systems,
  • Impacts on communications networks, and
  • Attacks affecting transport or logistics systems.

These may be amplified by coordinated disinformation campaigns designed to exaggerate impact and erode public trust. Even short-lived or localised incidents could therefore have broader operational and reputational consequences.

Preparedness and Resilience Priorities

Early and proactive preparation is essential. Public sector bodies should plan for a sustained period of heightened cyber risk, align with frameworks such as NIS2 and DORA, and prioritise scenario testing and crisis response. This should be supported by stronger monitoring and detection, proactive cyber defence, and better supply chain security. Core measures, including patch management, network segmentation, multi-factor authentication, endpoint security, and staff awareness, remain critical.

Conclusion: A Coordinated National Response

Ireland’s EU Presidency should be regarded as a period of heightened strategic cyber exposure, requiring coordinated cross-sector preparedness and timely action to safeguard public services and critical infrastructure.

Crowleys DFK’s Public Sector and Government Services Department is supporting clients in preparing for the requirements of the NIS2 Directive. Whether you need assistance assessing your current cybersecurity posture, reviewing governance and risk management measures, identifying compliance gaps, or evaluating the wider operational impact of NIS2, we can help.

If you would like to learn more about our NIS2 preparedness review services, please get in touch with our team.

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R&D Tax Credit: Key Enhancements and What They Mean for Your Business

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R&D Tax Credit: Key Enhancements and What They Mean for Your Business

Finance Act 2025 introduced significant enhancements to Ireland’s R&D Tax Credit, reinforcing its position as a cornerstone of Ireland’s innovation and foreign direct investment strategy.

Increased Credit Rate

The most notable change is the increase in the R&D Tax Credit rate from 30% to 35%, the second increase in two years. This higher headline rate strengthens Ireland’s competitiveness when compared internationally and provides greater certainty for both multinational and indigenous companies making long‑term R&D investment decisions.

Improved Cash-Refund Mechanism

Finance Act 2025 also improves the R&D Tax Credit cash‑refund mechanism by increasing the first instalment threshold from €75,000 to €87,500. This allows companies with claims below this threshold to receive the full credit upfront in year one, delivering a valuable cash‑flow benefit, particularly for SMEs and early‑stage companies.

Treatment of Employee Time

In addition, where an employee spends 95% or more of their time on qualifying R&D activities, 100% of their emoluments may now be treated as qualifying R&D expenditure. This simplifies claims for businesses with dedicated R&D staff, although robust contemporaneous documentation remains critical.

Laboratory Construction Expenditure

The legislation also clarifies that expenditure on the construction of laboratories used for R&D can qualify for the R&D Tax Credit. However, exclusion of areas deemed to be “office space” may give rise to interpretation issues, particularly where desk‑based technical work forms an integral part of laboratory activity.

Instalment Payment Clarifications

The legislation also makes clear that companies must state whether each R&D Tax Credit instalment should be treated as a tax overpayment, to be offset against another company tax liability, or paid directly by Revenue, and it clarifies when the third instalment is due.

What Businesses Should Do Next

Companies carrying out R&D activities should reassess their R&D Tax Credit position in light of these enhancements, particularly around project eligibility, employee time allocation, and cash‑refund planning, to ensure they are maximising available relief while meeting Revenue expectations.

For further information, please contact us.

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Ireland’s VAT Rate Changes from 1 July 2026: What Businesses Need to Know

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Ireland’s VAT Rate Changes from 1 July 2026: What Businesses Need to Know

Revenue has confirmed a permanent reduction in VAT rates for food, catering and hairdressing services from 1 July 2026. It is designed to alleviate some of the pressure on SMEs, such as rising energy costs, higher wages and insurance, and declining sales, while also helping to maintain jobs and sector stability. The lower rate is also intended to help households manage cost‑of‑living pressures.

What’s Changing

According to the new guidance, the VAT rate will be reduced from 13.5% to 9%. A VAT rate of 9% was first introduced as a tax subsidy during the Covid-19 period, with the current rate of 13.5% re-established in September 2023.  Unlike the previous 9% rate, which was more general and applied to hotel or similar holiday accommodation, it is more targeted and specifically applies to:

  • Restaurant and café catering services (excluding alcohol, soft drinks, and bottled water)
  • Takeaway food
  • Hairdressing services

What’s Unchanged

Households and businesses will continue to benefit from the reduced 9% rate on electricity and gas bills until 2030. VAT rates on qualifying new build apartments will remain at 9%, effective from 8 October 2025 to 31 December 2030.  This intervention aims to increase housing supply by making building apartments more viable to developers grappling with rising construction costs.

What it Means for Businesses

To prepare for the VAT reduction, businesses in hospitality, catering and hairdressing sectors should focus on the following:

  1. Update your pricing systems:
    Businesses must update their Point-of-Sale (POS) and accounting systems to correctly apply the 9% rate to relevant items from July 1st, while ensuring items that don’t qualify (like alcohol or, in some cases, hotel accommodation) remain at the 23% or 13.5% rate. Miscalculating this can lead to penalties or unexpected tax debts.
  1. Improve Margins Transparently:
    Businesses will need to decide how they intend to reflect the VAT reduction in their pricing, whether by passing savings on to customers or retaining some profit margin. All menus and service prices should be updated before 1 July 2026.Some businesses will understandably see an opportunity to offset increased energy, labour and operational costs. However, businesses should be mindful that if VAT drops from 13.5% to 9% and prices remain unchanged, customers may see this as unfair or opportunistic.
  1. Adjust Cash Flow Forecasts:
    Businesses should be aware that the lower rate will mean slightly less VAT to pay to Revenue, which may affect cash flow timing. Because of the delay between collecting VAT from customers and paying it to Revenue, many businesses effectively use this as short-term working capital. A reduced VAT rate means less of this cash on hand, increasing the need for accurate cash flow forecasts to cover day-to-day operations.

Next Steps

With the 1 July implementation date approaching, businesses should take the following steps to prepare:

  1. Review product/service catalogues to identify which items will be affected by the reduced rate and update accordingly.
  2. Update internal systems, pricing labels and menus well in advance of 1 July.
  3. Ensure staff are aware of the changes and can clearly explain any pricing changes to customers.

How We Can Help

Our Accounting & Financial Advisory team are supporting clients in preparing for the upcoming VAT changes. Whether you need assistance reviewing VAT treatment, updating systems, or assessing the wider impact on pricing and cash flow, we can help ensure a smooth and compliant transition.

If you would like to discuss how these changes may affect your business, please contact us.

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New €3 customs duty for low-value parcels imported into the EU

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New €3 customs duty for low-value parcels imported into the EU

From 1 July 2026, low-value parcels imported into the European Union will no longer benefit from customs duty relief. Instead, a fixed customs duty of €3 will apply to goods valued at less than €150 entering the EU, a change that is expected to have a significant impact on cross-border e-commerce and import compliance.

How the new €3 duty will apply

The new €3 duty will be applied to each different item in a consignment according to its tariff heading, meaning that a single parcel containing multiple product types may attract more than one charge. For example, a parcel contains 1 blouse made of silk and 2 blouses made of wool. Due to their different tariff headings, the parcel contains two distinct items and €6 in customs duty should be paid.

The measure will apply to goods entering the EU where non-EU sellers are registered in the EU’s import one-stop shop (IOSS) for VAT.

Importantly, this customs duty is separate from the proposed handling fee that is to be introduced by all EU countries before 1 November 2026.

Interim Measure

This €3 duty is an interim measure and is expected to remain in place until 1 July 2028 but may be extended. It is designed to apply until the full EU customs reform package comes into effect. At that point, the current €150 threshold will be removed entirely and goods below that value will instead be subject to the normal EU customs duty rates for the relevant products.

Implications for Cross-Border e-Commerce Traders

This represents an additional cost for non-EU traders selling into the EU. Traders should review their pricing model for the EU market to ensure profitability and should work with their carriers to ensure tariff headings for parcels entering the EU are declared accurately.

Should you require any assistance in this area, please contact us.

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Tax Relief for New Start-Up Companies

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Tax Relief for New Start-Up Companies

New start-up companies who set up and commence a qualifying trade on or before 31 December 2026 may be able to reduce their corporation tax bill for their first 5 years of trading.

The aim of the relief is to support businesses in the early stages of growth by reducing, and in some cases fully eliminating, corporation tax payable on the profits of the new trade and certain chargeable gains, helping to improve cash flow while the business is getting established.

The relief applies where the company’s total corporation tax payable for the period does not exceed €40,000. Marginal relief is also available where the total corporation tax payable is more than €40,000 but less than €60,000.

The relief available each year is linked to the total Employer’s Pay Related Social Insurance (PRSI) the company pays for its employees and directors. This includes Employer’s PRSI up to a maximum of €5,000 per employee and Class S PRSI up to a maximum of €1,000 per director.

Any unused relief arising in the first 5 years of trading, due to losses or insufficient profits, may be carried forward for use in subsequent years.

This relief is intended for genuine trading activities and does not apply to investment or passive income.

Qualifying Conditions

  1. The company must be incorporated in the State, the EU/EEA or in the United Kingdom on or after 14 October 2008.
  2. The company must set up and commence a “qualifying trade” in the period beginning on 1 January 2009 and ending on 31 December 2026. The following are not qualifying trades for the purpose of this relief:
    • A trade that was carried on previously by another person (this rules out sole traders incorporating their trade into a limited company).
    • An existing trade (this rules out forming a new company and acquiring a new trade).
    • An excepted trade (i.e. dealing in or developing land, exploration and extraction of petroleum or working minerals).
    • Service company activities that come within S. 441 TCA close company provisions.
    • A trade if carried on by an associated company of the new company would form part of the existing trade carried on by the associated company.
  3. The company does not exceed the specified levels of corporation tax due.

Example A:

A start-up company’s corporation tax for an accounting period is €20,000, referable entirely to income and gains from a qualifying trade. The total amount of qualifying Employer’s PRSI paid in the accounting period is €17,000.

The amount of relief available for the accounting period is €17,000, meaning the corporation tax referable to income and gains of the qualifying trade is reduced from €20,000 to €3,000.

Example B:

A start-up company’s corporation tax referable to income and gains from a qualifying trade for an accounting period is €20,000. The company also has corporation tax of €3,000 due on its investment income. The total amount of qualifying Employer’s PRSI paid in the accounting period is €25,000.

The amount of relief available for the accounting period is €20,000, meaning the corporation tax referable to income and gains of the qualifying trade is reduced to nil. The company must pay corporation tax of €3,000 on its investment income. The excess relief amount of €5,000 can be carried forward for use in future accounting periods following the five-year relevant period.

Example C:

The total corporation tax payable by a start-up company for an accounting period is €16,000. This refers entirely to income from a qualifying trade. The company has three employees and paid the following amounts of Employer’s PRSI in the accounting period:

Employee Details Employer’s PRSI paid €
Employee 1 2,000
Employee 2 3,000
Employee 3 6,000
Total PRSI 11,000

The amount of qualifying Employer’s PRSI is capped at €5,000 per employee. Therefore, the aggregate amount of qualifying Employer’s PRSI for the period is €10,000 (i.e. €2,000 plus €3,000 plus €5,000).

The relief available is €10,000, meaning the corporation tax of €16,000 referable to income of the qualifying trade is reduced to €6,000.

Conclusion

This relief can be particularly valuable for new businesses with employees, but careful planning at the start of the business is important to ensure the relief can be accessed and fully utilised.

Should you require any assistance in this area, please contact us.

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Revenue clarifies its position on RCT for Mixed Contracts

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Revenue clarifies its position on RCT for Mixed Contracts

Revenue previously updated its Relevant Contracts Tax Manual in June 2025 to include a detailed section on contracts for the acquisition of property, especially where both construction services and land supply are involved.

The guidance confirmed that where a contract provides for both construction services and the supply of land, only the construction services are subject to RCT. If there is a single consideration for both, the principal must apportion the amount applicable to construction services. This marks a change from previous Revenue guidance, which stated that if any part of a contract was for relevant operations (construction, meat processing or forestry), all payments under that contract were liable for RCT.

In a welcome development, Revenue has now updated its Relevant Contracts Tax Manual in February 2026 in relation to mixed contracts. Mixed contracts include elements within the scope of RCT and elements that fall outside it, for example:

  • A contract to provide design‑and‑build services to a principal; and
  • A contract for the supply and installation of systems in a building or structure.

Revenue’s most recent guidance now confirms that where a single contract price covers both RCT‑relevant and non‑RCT elements, the principal is required to apportion the consideration. RCT should then be applied only to the portion of the contract relating to construction operations.

What Does This Mean for Mixed Contracts?

  • The legislation does not provide for RCT to apply to services outside the definition of construction, meat processing, or forestry operations.
  • For mixed contracts, the contract value must be apportioned between construction services (the relevant contract) and other elements (e.g., sale of land, design services, materials).
  • Activities that are integral to an overall construction project (e.g. site clearance, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works) remain within the scope of RCT.

What Does This Mean for Repair & Maintenance Contracts?

The new guidance maintains Revenue’s position that RCT applies to contracts for repair work and to contracts for repair and maintenance work.

Takeaway for Contracts with Mixed Elements:

If you’re entering into contracts that combine construction, meat processing, or forestry operations with other services or sales, ensure you can clearly apportion the contract value. RCT will only apply to the part of the contract that relates to relevant operations.

Should you require any assistance in this area, please contact us.

 

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New Government AI Guidelines May Be Too Broad for Practical Use

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New Government AI Guidelines May Be Too Broad for Practical Use

In the last three years artificial intelligence has become a significant presence in our working lives. As these technologies have grown, so too have the calls for regulation and guidance on their use. In response, the Government of Ireland has issued advisory guidelines for public sector organisations deploying AI. These new guidelines provide an extensive framework for deploying AI, which is surely welcome. The Guidelines, however, run the risk of being too broad. There are so many provisions included, touching on areas from climate change to diversity and inclusion to design requirements to transparency rules, that it is hard to imagine any organisation could apply these completely.

It is worth framing at the outset that these Guidelines have been written to be optional for public sector organisations. They can also be considered provisional, as the speed with which these technologies are changing makes fixed rules irrelevant. What the Guidelines establish instead are a series of seven principles intended to guide use of AI. In deploying AI, public sector organisations are now asked to consider the following:

  1. Human agency and oversight
  2. Technical robustness and safety
  3. Privacy and data governance
  4. Transparency
  5. Diversity, non-discrimination, and fairness
  6. Societal and environmental well-being
  7. Accountability

Each of these principles outline an ideal to be aspired to when using AI. For instance, “Principle 4: Transparency,” commits public sector workers to being transparent with end-users about the AI systems in use. There must be clear documentation of AI model development, and the public must be informed whenever they are interacting with an AI system. In many cases, these principles tie into existing laws or initiatives. “Principle 3: Privacy and Data Governance”, for example, relates to GDPR compliance, while “Principle 5: Societal and Environmental Well-Being” is informed by the Climate Action Plan.

Translating these principles into action involves following a “Project Lifecycle” for AI projects. This lifecycle breaks down any AI project into five key stages: “Design, Data & Models”, “Verification”, “Deployment”, “Operation”, and “Retirement”. Some of these stages are further divided into subsections. For instance, the Design stage includes Planning & Design, Data Collection & Processing, and Model Building, with each of these subsections outlining specific actions to be followed to complete the stage. It is here we encounter the scale of the Guidelines. Each stage comes with a set of actions and, in each case, there are enough actions to fulfil all seven of the principles. This means there is a minimum of seven actions per stage and a rapid ballooning of potential actions.

As an example, in the “Planning & Design” phase an organisation might choose to “set up role-specific responsibilities for oversight”, “integrate data minimisation and security protocols into the AI design”, or “conduct social impact assessments to ensure AI systems contribute positively to Irish society”, among other actions. On their own, the actions have value. Taken together they can represent an enormous burden. “Planning & Design” contains twenty-six potential actions, and this is only one of three sub-stages for “Design, Data & Models”. Furthermore, the Guidelines also suggest two additional planning stages, outside of the Project Lifecycle. These are the Decision Framework and the AI Canvas. The Decision Framework consists of a list of questions to be considered at the outset of a project, while the AI Canvas provides a worksheet comprised of fifteen questions for the Project Lead to answer during the planning stage of an AI project. These sections are also optional, although the AI Canvas in particular is more compressed and user friendly than the ideas set out in the Lifecycle.

It is worth bearing in mind that at this moment debates are ongoing within the European Parliament as to whether GDPR should be rolled back. Tech regulation in Europe has suddenly become very uncertain. At the same time, the government’s pre-existing commitments, such as targets in ESG areas, cannot be easily dropped. These Guidelines speak to this contrast: they put everything on the table as a possible means of regulation, but do not commit to any one method. Working out what to do with the Guidelines will be a challenge itself.

Contributors
                                                    

Vincent Teo | Partner & Head of Public Sector & Government Services

Vincent Teo
Partner & Head of Public Sector & Government Services

 Dr. Conor Dowling | Research & Policy Executive | Risk Consulting

Dr. Conor Dowling
Research & Policy Manager
Risk Consulting
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New VAT Rules for Small Businesses | EU VAT SME Scheme

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New VAT Rules for Small Businesses (VAT SME Scheme)

The domestic VAT SME scheme allows small businesses to sell goods and services to their customers without charging VAT. In Ireland, the VAT registration thresholds are:

  • €42,500 for businesses supplying services; and
  • €85,000 for businesses supplying goods.

Irish businesses operating below these thresholds making supplies of goods and services within Ireland are not required to register and charge for VAT. However, up to 31 December 2024, if the Irish business made supplies in another EU Member State, there was no registration threshold and the business could have registration and filing obligations in the Member State where the supply took place.

From 1 January 2025, the EU VAT SME scheme allows these small businesses the option to avail of the registration thresholds in other Member States. If eligible, these businesses will not have to register for VAT when supplying goods and services there.

To be eligible to use this EU VAT SME scheme in another Member State, an Irish business must:

  • be established for VAT purposes in Ireland only,
  • not exceed the domestic turnover threshold(s) of the other Member State(s) where supplies are made,
  • not exceed the Union turnover threshold of €100,000,
  • be registered in Ireland to use the scheme and file quarterly reports once registered. These reports declare the turnover of the small business in all EU Member States.

An Irish business wishing to register to use the scheme in other Member States must make a formal application to Revenue. If successful, it will receive an individual identification number with the suffix “EX”. This number must be provided on any invoices issued by the business.

Business customers located in other EU countries who receive an invoice with “EX” are not obliged to account for VAT using the reverse charge mechanism on that invoice. It is the business customer’s responsibility to check the VAT exempt status of the small enterprise using the SME verification check.

The EU VAT SME scheme is only open to small businesses established within the European Union. It does not apply to small businesses established in the United Kingdom, including Northern Ireland.

It is possible for a small business to avail of the EU VAT SME scheme in some Member States and the standard VAT regime or One Stop Shop scheme in others. As businesses that avail of the VAT SME schemes cannot reclaim VAT on their costs, each small business must assess the best option for them.

However, this new scheme will significantly reduce compliance for small EU-based businesses selling to other EU countries.

If you require further information or assistance, please contact us.

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