Indirect tax: collected by one party, borne by another
Updated: July 2026
An indirect tax is collected by someone other than the person who bears it. The shop charges you VAT and passes it to Revenue; the burden is yours, the collection job is theirs. That intermediary structure, not the goods involved, is what makes a tax indirect, and it is the defining contrast with direct taxes on income and profits.
Ireland's indirect taxes
- VAT: the broad one, on most goods and services, and among the largest revenue sources in the state. Every registered business is a collection point.
- Excise duties: per-unit charges on alcohol, tobacco and fuel, collected from producers and importers long before the consumer appears. Irish excise on tobacco is among the highest in the world by design.
- Carbon tax: charged per tonne of CO2 on fossil fuels through the fuel supply chain, on a legislated rising path.
- Customs duty: on imports from outside the EU, collected at the border and mostly remitted onward to the EU budget.
- VRT on first registration of vehicles, collected through dealers, and stamp duty on property and share transactions, collected through the conveyancing process.
Why states lean on indirect taxes
They are cheap to run: Revenue deals with tens of thousands of registered businesses instead of millions of consumers. They are steady: consumption falls less than income in a downturn. And they are quiet: a tax inside a price generates fewer protests than one printed on a payslip. The cost of that quietness is fairness pressure, because a tax that ignores who is paying takes a bigger share of small incomes, which is the regressivity argument covered on the consumption tax page along with Ireland's zero-rate answer to it.
The business angle
If you run a VAT-registered business, indirect tax is not an abstraction: you are the state's collection agent, unpaid, with filing deadlines. The consolation is the input deduction, which keeps the tax itself from being your cost. The obligation that matters is accuracy, and the arithmetic half of accuracy is exactly what the VAT calculator exists to check.
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Common questions
What makes a tax indirect?
Collection through an intermediary. The business collects the tax from the customer inside the price and remits it to the state, so the person bearing the tax and the person paying it over are different.
Is VAT the biggest indirect tax in Ireland?
Yes by a wide margin. VAT raises more than all other indirect taxes combined, with excise duties on fuel, alcohol and tobacco the next largest group.
Who actually pays excise duty?
It is collected from producers and importers, but it is built into the retail price, so the consumer bears it. On alcohol, tobacco and fuel, VAT is then charged on the excise-inclusive price.