VIES is the VAT Information Exchange System. It allows the exchange of certain VAT data between EU Member States to combat fraud and other irregularities. Information collected by each Member State from VIES statements is available to the tax authorities of other Member States for the purpose of controlling the taxation of goods acquired in other Member States and in order to combat evasion of VAT.
Certain supplies of goods and services to businesses in other EU Member States can be zero-rated for VAT purposes. This is conditional on the trader being able to demonstrate that the goods or services have been supplied to a VAT registered trader in another Member State.
For this reason, every VAT-registered business in Ireland which supplies goods or services to a VAT-registered business in another EU country must submit a VIES return on a monthly or quarterly basis. Up until 2009, only goods were included on the VIES return. From 1 January 2010, services were added to the VIES return requirements.
There is no minimum threshold. Once you supply goods or services to a business customer, no matter what the euro amount, you need to complete a VIES return. The only exceptions are supplies of services which are exempt from VAT according to the rules in the customer’s Member State, and of course, supplies to private customers.
Failure to comply with VIES regulations can result in a penalty of €4,000 and Revenue have an active prosecution policy in this regard.
How Often are VIES Returns Required?
VIES returns are normally made quarterly and, as stated above, must be filed online. However, where a business supplies goods to other EU countries in excess of €50,000 in any quarter, it will be obliged to submit monthly returns. In certain circumstances, it possible to file an annual return.
What Information is Required on the Return?
The VIES return is relatively easy to complete, with only the following information required:
- The individual/company’s own VAT registration number.
- The full VAT registration number of each of the customers in other Member States to whom the business made a zero rated Intra-Community supply of goods / services during the period.
- The total value of such supplies made to each customer during the period.
- Indicate if the supply was for services.
- Indicate if the supply of goods involved triangulation (e.g. a supply of goods between a VAT registered person in Ireland and a VAT registered person in a second Member State but where the same goods are supplied directly to a third Member State).
You can check the validity of a VAT number on this handy European Commission VAT Number validation site.
Given that Revenue are actively prosecuting businesses for failure to comply with VIES regulations, it is vital that bookkeeping staff, financial controllers and business-owners are aware of the VIES obligations and have systems in place to capture and record the relevant data. More information can be found in Revenue’s VIES and Intrastat manual.
If you enjoyed this post, you might like to subscribe to our newsletter, which delivers free monthly updates, like this one, direct to your inbox. As always, if you have any queries of a general nature, please leave a comment below.
In my next post, I will cover Intrastat returns. These returns apply to businesses that supply goods to or receive goods from other EU countries.