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Temporary VAT rate reduction due to Covid-19

The Irish government is supporting businesses by temporarily reducing the VAT rate from 23% to 21%. This reduced rate is applicable from 1 September 2020 to 28 February 2021 (unless the end date is extended by the Irish government).

As of 1 September 2020, QuickBooks has updated the tax codes affected; full details of these codes are provided below. For a limited subset of customers, transactions entered in QuickBooks between 1 September 2020 and 23 September 2020 resulted in entries using the original rate of 23%, rather than the reduced rate. The entries are limited to the following tax codes:

  • RCS - for services bought from suppliers in the EU, where a reverse charge applies at the standard rate
  • RCG - for goods bought from suppliers in the EU, where a reverse charge applies at the standard rate
  • RCG – R - purchases for resale from the EU where reverse charge applies at the standard rate
  • Standard – R - purchases for resale at the standard rate.

Review transactions

If you entered transactions in QuickBooks between 1 September 2020 and 23 September 2020 using any of the above tax codes, please review your transactions to ensure they reflect the temporarily reduced rate by following these steps:

Step 1: Get a VAT Detail Report

  1. Go to the Reports menu.
  2. Enter VAT Detail Report in the search field. You can also browse for reports in the Reports menu.

Step 2: Customise your report

  1. In the Report period dropdown, select the length of time you want to see.
  2. In the date field, select 01-Sep-2020 as the start date.
  3. In the Accounting method section, select Accrual.
  4. Select Run report.

Step 3: View transactions

  1. Click on a transaction to open it.
  2. If the tax charged was incorrectly recorded as 23%, reselect the tax code and it will reflect the 21% rate.
  3. Select Save and close.
  4. If the supplier changed a 23% rate, consult with the supplier and/or with your bookkeeper or accountant on the best way to handle this transaction.

Which transactions should I be checking?

We recommend reviewing your transactions between 1 September 2020 and 23 September 2020.

A supplier charged me 23% on a purchase. What should I do?

While we are not permitted to provide tax advice and recommend you reach out to your accountant, we are informed that the Irish government will be coming out with guidance on Return of Trading Details (RTD) and other reports and we will communicate that guidance to our customers if and when it is available.

We can only advise how to revise the VAT entry in QuickBooks.

Will I see adjustments in the VAT Centre?

You may see adjustments in the VAT Centre depending on how and when they are marked as lodged in QuickBooks Online.

Read more about editing sales tax rates and managing tax rate changes.

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