VAT Exempt Items Ireland

Complete guide to VAT-free and zero-rated goods and services in Ireland. Understand the difference and what matters for your business.

0%

Zero Rate

13.5%

Reduced Rate

Exempt

No VAT

23%

Standard

VAT Exempt vs Zero-Rated: What's the Difference?

Zero-Rated (0%)

Customer Pays

0% VAT

Supplier Can Reclaim VAT

Yes, input VAT is reclaimable

Examples

Food, children's clothing, books, medicines

For Business: Zero-rated is better – you get full input VAT relief while charging 0% to customers.

VAT Exempt

Customer Pays

No VAT (0%)

Supplier Can Reclaim VAT

No, input VAT cannot be reclaimed

Examples

Insurance, finance, education, health

For Business: Exempt items cost more to supply because input VAT is a cost, not recoverable.

Key Point: Customer pays the same (nothing) in both cases, but the business impact is very different. This is critical for VAT planning.

Zero-Rated Items (0% VAT)

Food & Drink

  • • Fresh fruit and vegetables
  • • Meat and fish (uncooked)
  • • Bread and cereals
  • • Milk and dairy products
  • • Eggs
  • • Non-alcoholic beverages
  • Excluded: Hot/takeaway food, catering, confectionery

Children's Clothing

  • • Shoes and boots (under 6.5 to size 5.5/6)
  • • Clothing items sized for children
  • • Growth pads for shoes
  • • Clothing for average child height/weight
  • Excluded: Adult clothing, costumes, school uniforms

Books & Publications

  • • Books and booklets
  • • Newspapers and periodicals
  • • Maps and globes (for educational use)
  • • Religious materials
  • Excluded: Advertising material, e-books, magazines with ads

Public Transport

  • • Bus and coach services
  • • Train and tram services
  • • Underground rail
  • • Passenger ferries
  • Excluded: Luxury/private transport, parking

Prescription Medicines

  • • Prescription drugs and medicines
  • • Medical equipment on prescription
  • • Oxygen and respirators
  • Excluded: OTC medicines (standard rated), supplements

Water & Sewerage

  • • Domestic water supply
  • • Domestic sewerage services
  • • Waste water treatment
  • Excluded: Non-domestic water, industrial use

Reduced Rate Items (13.5% VAT)

Domestic Fuel & Power

  • • Electricity (domestic)
  • • Gas (domestic)
  • • Solid fuels for heating
  • • Oil heating

Safety & Child Seats

  • • Child car seats and booster seats
  • • Installation of child seats

Smoking Cessation

  • • Nicotine patches and gum
  • • Prescription smoking cessation products

Energy-Saving Materials

  • • Insulation materials
  • • Energy-saving windows
  • • Installation of energy-saving items

VAT Exempt Items (No VAT, No Input Recovery)

Insurance & Pensions

  • • Life insurance
  • • Car, home, travel insurance
  • • Pet insurance
  • • Pension advice and administration
  • Brokers' commissions are also exempt

Finance & Banking

  • • Loans and credit provision
  • • Interest and transaction fees
  • • Money transfers and exchanges
  • • Payment card services

Education & Training

  • • School and university tuition
  • • Vocational training by approved providers
  • • Exam fees (certain types)
  • Note: Corporate training is often standard rated

Health Services

  • • Medical treatment and services
  • • Dental and optical services (some)
  • • Health clinic services
  • • Physiotherapy (by registered providers)

Burial & Cremation

  • • Funeral services
  • • Burial plots and maintenance
  • • Cremation services
  • • Gravestones and memorials (supplies)

Postal & Property Services

  • • Royal Mail letter post
  • • Leasing/renting of property (mostly)
  • • Agricultural land rental

Standard Rate (23% VAT)

If something is not zero-rated, reduced-rated, or exempt – it's standard rated at 23%.

Common 20% Items

  • • Most food (hot/takeaway, confectionery)
  • • Alcohol and tobacco
  • • Adult clothing and footwear
  • • Electronics and appliances
  • • Furniture and household goods
  • • Construction and repairs
  • • Professional services
  • • Restaurants and takeaways

Services in 20% Category

  • • Hairdressing and beauty
  • • Repairs (goods and property)
  • • Delivery and shipping
  • • Accommodation (hotels, B&B)
  • • Entertainment and entry fees
  • • Car rental
  • • Pet services
  • • Most professional services

Why It Matters for Your Business

Input VAT Reclaim

If you sell zero-rated items, you can still reclaim input VAT on costs. This improves cash flow.

Example: Bookstore buys stock (zero-rated) and can reclaim input VAT even though they sell at 0%.

Cost Impact

Exempt services cannot reclaim input VAT, so costs are higher. This affects pricing strategy.

Example: Insurance broker bears the cost of VAT on their office rent and cannot reclaim it.

VAT Return Impact

Zero-rated income with VAT input reclaim = VAT refund. Exempt income = no refund opportunity.

Result: Businesses selling zero-rated goods often receive VAT refunds.

Mixed Sales

Businesses selling both standard and exempt items need to apportion input VAT.

Complexity: Proper accounting and VAT apportionment is essential.

Frequently Asked Questions

It depends on whether it's confectionery. Chocolate cakes are confectionery (23%), while plain cakes are zero-rated. Catering (cakes decorated to order) is standard rated. The presentation and decoration matter.

You cannot reclaim input VAT on exempt supplies. That's the rule. However, input VAT on costs directly related to standard-rated supplies can still be reclaimed (use apportionment if mixed).

The customer pays the same (0% or the regular price without VAT added). Business-to-business exempt supplies don't require a VAT number to be verified – they're automatically exempt. Consumer customers simply pay the base price.

Yes. Imports of zero-rated items (like food) are zero-rated. Imports from outside Ireland may be subject to import VAT. Check the tariff code and supplier location.

Check Revenue Commissioners's VAT Notice 700/1 (The VAT Guide). Use the VAT product finder tool on Revenue Commissioners website. When in doubt, ask a tax advisor. The distinction is important for your VAT return.

Need VAT Help for Your Business?

Use our calculators and guides to understand your VAT obligations.

Reverse VAT Calculator Irish VAT Rates

Related Tools & Resources

Explore more VAT tools and guides:

Irish VAT Rates Reverse VAT Calculator VAT Calculator Small Business VAT Guide Import VAT Calculator

Official Irish tax resources:

Revenue.ie – Current VAT Rates Citizens Information – VAT Exempt Goods