The Revenue Commissioners have unfairly refused Irish companies millions of euro in VAT refunds, according to the State's leading accountancy practices.
Tax practitioners at KPMG, Deloitte, Ernst & Young (E&Y) and BDO Simpson Xavier are calling on the Irish tax authorities to act quickly to recompense companies in the light of a landmark European court ruling.
The European Court of Justice decision involved Kretztechnik, an Austrian medical devices subsidiary of General Electric, which was looking to recoup VAT spent on legal and accounting fees related to its listing in Frankfurt five years ago.
It ruled clearly that companies have the right "to deduct in its entirety the VAT charged on the expenses incurred... for the various supplies acquired in connection with a share issue".
In the Republic, VAT on services is charged at 21 per cent and is a significant business cost.
Terry O'Neill, VAT partner at KPMG, said the Revenue would have to repay VAT in relation to the issue of shares by Irish companies in recent years. He called on them to expedite such payments.
"Revenue should be dedicating resources to responding to these decisions," he said.
He noted that the Government had been on the wrong end of several recent court decisions on VAT in Europe and had, in certain cases, been slow to release guidance on how it would implement the court rulings.
Richard McDaid, a member of Deloitte's indirect tax team, said the court judgment "overturns a long-held Revenue practice" on consistently denying taxpayers the right to deduct VAT in relation to share issues.
"Businesses that previously restricted the deduction of VAT on costs associated with historic issues can now revisit those costs and submit a VAT refund claim," he said.
E&Y director of indirect tax Jarlath O'Keefe said that Revenue's decision until now to block VAT recovery in such circumstances "based on a dubious interpretation of the European Court of Justice's case law" had cost Irish businesses millions of euro.
He said Revenue's position was now "unsustainable".
He also noted that companies that raise money in ways other than through the issue of shares - through corporate bonds or other securities - should be able to reclaim VAT incurred in such transactions.
