Optical practitioners in Ireland are celebrating an estimated €50m VAT windfall after the Office of the Revenue Commissioners accepted that the sale of spectacles and contact lenses constitutes two supplies - a taxable supply of goods and a tax-exempt service provision.
The settlement brings a 10-year battle to have the dual supply recognised, which stemmed from the change in the treatment of VAT in the UK, and comes more than three years after the Appeal Commissioner decided dual supply was right in principle.
The case was brought by the Association of Optometrists Ireland (AOI), but all practitioners in the Republic are able to make claims. While some who have contested their VAT bill from the beginning of the dispute will be able to make claims dating back more than 10 years, most will only seek repayment for the past four.
Derville Pitcher, council member at the AOI, told Optician that the decision was significant. 'After 10 years it's finally over. It's vindication that the Appeal Commissioner made the right decision and they're going to start refunding the money - it's a pity it took so long.'
Pitcher said that anyone can begin sending in their reclaims. The AOI will write to its approximately 600 members this week to clarify the decision and clarify the VAT rates that have pertained over the past 16 years.
In a briefing on its website, the Revenue Commissioners said: 'This decision gives rise to an entitlement to repayment of VAT to opticians where they had accounted for VAT at the standard rate on the dispensing service element of the price.'
However, the document concludes, section 97 of the Finance Act 2006 comes into effect on November 1. This new legislation will group dispensing services with the supply of spectacles and contact lenses in what is defined as a 'composite supply'. 'the rate of VAT on the full consideration for that composite supply will be the standard rate.'