Fixed direct debits for Vat coming to an end
Revenue is rolling out changes to how VAT is paid via direct debit as part of its broader Direct Debit Modernisation project. The old Fixed Direct Debit (FDD) system is being phased out and replaced by the more flexible Variable Direct Debit (VDD), which better aligns with current banking standards.
What’s already happened?
The first wave of changes focused on Employer Taxes – like Income Tax, PRSI, USC, and LPT (collectively known as PREM). Employers had until 31 January 2025 to switch to VDD, and all FDD arrangements for PREM have now ended.
What’s next?
Revenue is now turning its attention to VAT payments. Businesses currently paying VAT by FDD will gradually move to VDD, starting from mid-2025. This shift will coincide with the end of their current annual VAT filing period.
Revenue has already sent letters to affected taxpayers and their agents (via ROS inboxes), explaining the changes. Two key updates in the move from FDD to VDD are:
- VAT will be filed bi-monthly instead of annually
- The exact balance due will be debited, rather than a fixed monthly amount
Key Point to Remember:
- Revenue has made it clear that there’s no need to take any steps just yet. Taxpayers should continue with their regular monthly FDD payments for now. Revenue will follow up closer to each business’s annual filing deadline with instructions on how to make the switch to VDD.
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