Irish sex shops under a tax spotlight

Posted: August 15, 2011

In order to counter the so-called black economy, Revenue investigators have been focusing on sex shops and lap-dancing clubs in Ireland recently. According to the Irish Independent newspaper, a surveillance operation intended to trace cash flow through a sex shop in “an undisclosed location” has been in progress as part of a crackdown on tax compliance within Ireland’s legally-grey adult entertainment industry. In co-operation with social welfare investigators, Revenue officials said the surveillance had progressed, “to good effect” but declined to release further details. A spokesman said, “Revenue has carried out interventions throughout the country in the adult-entertainment sector including sex shops, lap-dancing clubs, casinos and head shops.”

Sex shops that deal with a large number of cash sales are perceived to be a particularly difficult area of commerce to police and tax, thanks to fewer transactions leaving a financial paper trail than mainstream businesses. T-shirt sellers, horse traders at the famous Smithfield Horse Fair in Dublin, fast-food sellers and temporary car park operators have also been investigated for illegal activity by the Gardaí, social welfare and customs officials recently. According to the Irish Independent, a Revenue spokesman said it also wanted to ensure all businesses and individuals were operating on a level playing pitch.

While no specific figures for the Irish adult entertainment industry have been released, as it’s included in a broader retail catagory, one in five taxi drivers stopped at 44 checkpoint operations across the South West and Irish Border Midlands West regions required “follow-up action”, and over €10 million in outstanding tax was recovered from 248 takeaways and restaurants investigated by the Revenue last year. With problems in the Eurozone and recession ongoing, Irish tax investigators say the risk of tax avoidance is growing and will continue to do so “unless there is a very strong and visible response” by officials.