Please note that the information contained in this leaflet has ceased to apply with effect from 1January 2010. This is as a result of the introduction of the New Place of Supply Rules effective from this date. Information concerning the new rules is available in the Place of Supply of Services VAT Information leaflet.
1. This information leaflet sets out the VAT treatment of the services listed in the Fourth Schedule to the VAT Act, 1972 (as amended). These are set out in full in Paragraph 3 and a brief guide to them is set out in Paragraph 24.
2. The general rule in relation to the place of supply of services is that they are taxable at the place where the supplier is established. However, certain services are taxable where physically performed or where property is located. Normally, it is the suppliers who account for VAT due. However, there are certain types of services which, because they are generally intellectual or intangible in nature and easily traded internationally, are treated differently when supplied across national boundaries for the purposes of the customer’s business. When they are received from outside the State for business purposes or supplied to a business outside the State, it is the recipient of the service who accounts for any VAT due. It should be noted that where both the supplier and the customer are established in the one State, then the general rule applies i.e. the supplier accounts for any VAT due.
3. The legal provisions are contained in Section 5(6)(e) and the Fourth Schedule to the VAT Act 1972(as amended). The corresponding provisions of the VAT Directive 2006 are contained in Article 52 (a), (b) and (c).
3. The services are as follows:
4. Persons registered for VAT in the normal course of business who receive any of the taxable services listed in the Fourth Schedule from outside the State must account in Box T1 in their periodic VAT returns, along with their other VAT liabilities, on the invoiced amounts at the appropriate rate as if they had themselves made the supply. They must furnish their VAT number to the supplier. They are entitled to a credit for such VAT accounted for, in Box T2 of the return. Please see paragraphs 12 to 15 for details of entitlement to deductibility.
5. VAT-exempt persons (e.g. bookmakers, banks, insurance companies), and persons whose activities are outside the scope of VAT, such as charitable organizations, who receive taxable Fourth Schedule Services for business purposes from outside the State, must register and account for Irish VAT on these received services. It might be noted that persons in the State which receive Fourth Schedule services from a person established in another EU Member State where VAT is not charged in that EU Member State because the Irish recipient held himself/herself out to the supplier to be an accountable person, are required to self-account for Irish VAT on those received services. They will receive periodic VAT returns from the Office of the Collector General and must account for VAT in Box T1 of the return on the amounts charged to them, as if they had supplied them themselves from within the State. Where such persons receive taxable Fourth Schedule services for the purposes of an exempt business are not entitled to a VAT credit in the VAT return.
6. Government Departments, local authorities and bodies established by statute who receive Fourth Schedule Services from outside the State must register and account for the VAT on these services unless, in cases where they are supplied from another EU Member State, VAT is chargeable by the supplier in that Member State. It may be noted that Section 77 (1)(a) of the Finance Act 2007 provides for a change in the treatment of Fourth Schedule Services received by Government Departments, local authorities, and bodies established by statute. However, this change is subject to a commencement order being made by the Minister for Finance. Such an order has not yet been made.
7. A turnover threshold does not apply to persons in receipt of Fourth Schedule Services. Accordingly, all persons who receive such services from outside the State for business purposes must register and account for VAT.
8. An individual receiving Fourth Schedule Services for private (non-business) purposes is not obliged to register or account for Irish VAT in respect of the receipt of those services. Those services will be taxed in the country of the supplier.
9. Exempt persons retain their non-accountable status in respect of their non-accountable activities, even where they are obliged to register and account for received Fourth Schedule Services. Flat-rate farmers, fishermen and race-horse trainers who register in respect of Fourth Schedule Services are entitled to retain their unregistered status in respect of their farming or fishing activities.
10. Businesses which supply taxable goods or services and are not already registered for VAT because they are below the threshold for registration and who, for business purposes, receive Fourth Schedule Services from outside the State, are obliged to register and account for VAT on those services, irrespective of their value. However, once registered for Fourth Schedule Services they are required to account for VAT on all their activities.
11. The rate at which VAT is chargeable on Fourth Schedule Services is the same as that which applies to similar services supplied within the State, generally liable at the standard rate. The amount on which VAT is chargeable is the amount payable to the foreign supplier at the rate of exchange (if not in €) applicable on the date of the invoice. The receipt of certain services such as banking, financial and insurance will not give rise to a VAT liability. The supply of distance teaching electronically retains the VAT classification that applies to it when supplied directly.
12. A person who is registered for VAT in the State is entitled to claim a credit for VAT accounted for on received Fourth Schedule Services for the purpose of his/her taxable activities. Thus, the entries on the VAT return, T1 for accounting and T2 for credit, are self-cancelling and no net VAT is actually paid over in respect of the transaction.
13. A person who is obliged to register for VAT solely in respect of Fourth Schedule Services is not entitled to any VAT credit or deduction in respect of the VAT accounted for on receipt of those services.
14. Persons whose activities are engaged in partly taxable, partly exempt activities in the State will be entitled to a VAT credit only to the extent that the services are for use in the taxable activities of the business.
15. Persons whose activities are outside the scope of the tax or whose activities are exempt from VAT are not entitled to any VAT credit.
16. When an Irish business supplies a taxable Fourth Schedule service to a business customer established in another EU Member State or outside the EU, there is no liability to Irish VAT i.e. they are effectively zero rated. In such cases the place of supply is deemed to be the place of establishment of the recipient. Where the customer is established in another EU Member State, VAT is accounted for in that Member State. Where the customer is in business in another Member State but is not registered for VAT, the Irish supplier of Fourth Schedule Services should still apply the effective zero rate of VAT to the supply.
17. When an Irish business supplies goods or services outside the State only they are not required to register for VAT but are entitled to a repayment of input VAT in accordance with Section 12(1)(b) of the VAT Act. In practice, an Irish business whose supplies consist only of Fourth Schedule Services outside the State is permitted to register for VAT and to reclaim input VAT by means of the VAT return, subject to the normal restrictions.
18. Where the service is supplied to a VAT registered customer in another Member State, the supplier must ascertain the VAT Number of the customer and that number, and an indication that the reverse charge applies must be included on the relevant invoice issued by the supplier along with the suppliers’ own VAT Number and the usual information. It is possible to verify the format of a VAT Number at the EU Commission or whether a VAT Number is appropriate to a particular trader by contacting the VIMA Office at vimahelp@revenue.ie.
19. Fourth Schedule Services supplied to private individuals are subject to Irish VAT, even if the individual resides in another EU Member State.
20. Fourth Schedule services supplied to customers resident or established outside the EU are not subject to Irish VAT whether received for private or business purposes.
21.
The person liable to pay Irish VAT in respect of Fourth Schedule Services
Country of establishment of supplier |
Country in which customer established |
Status of Customer |
Place of supply |
Person liable to pay Irish VAT |
|---|---|---|---|---|
Ireland |
Ireland |
Business or Private |
Ireland |
Supplier |
Ireland |
Other EU State |
Business |
Other EU State |
No Irish VAT |
Ireland |
Other EU State |
Private |
Ireland |
Supplier |
Ireland |
Outside EU |
Business or Private |
|
No Irish VAT * - ** |
Other EU State |
Ireland |
Business |
Ireland |
Customer |
Other EU State |
Ireland |
Private |
Other EU State |
No Irish VAT |
Outside EU |
Ireland |
Business |
Ireland |
Customer |
Outside EU |
Ireland |
Private |
Outside EU |
No Irish VAT * - ** |
* Telecommunications
Where telecommunications services are supplied to a private customer and the effective use and enjoyment of these services takes place within the State, the place of taxation is Ireland and VAT registration by the supplier is required.
** Electronically Supplied Services (e-Services)
The ‘business to consumer’ place of supply rule for e-services provides that, where a non-EU business supplies such services to a private consumer in any Member State, the place of supply will be the place where the consumer normally resides. For example, if a Canadian business supplies electronic services to an Irish consumer, the place of supply (and of taxation) is the State. See VAT Information Leaflet - e-Services and Broadcasting.
22. A trader may have a number of establishments within the EU or indeed outside the EU. The place where the service is deemed to be received for VAT purposes is the establishment of the trader at which, or for the purposes of which, the services are most directly used or to be used, as the case may be.
23. It should be noted that services of consultants, lawyers, accountants and other similar services listed at Paragraph (iii) of the Fourth Schedule are not treated as Fourth Schedule Services where they are connected with property. Property includes land, roads, buildings, walls and fences.
24. Examples of property related services are:
Such services are taxable by reference to the place where the property is located.
Fourth Schedule services which are not related to property include:
25. The following provides a more detailed breakdown of the list of services covered in the Fourth Schedule.
Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer’s affairs. Registration forms TR1 - Tax Registration form for Sole Traders, Trusts and Partnerships and TR2 - Tax Registration form for Companies are available, along with general information on VAT and other taxes from the Revenue website at www.revenue.ie. Contact details for all Revenue Districts can be found on the Revenue website at Contact Details.
This leaflet is issued by:
VAT Appeals and Communications Branch,
Indirect Taxes Division,
Dublin Castle.
April 2010
