eServices & Broadcasting

Introduction

This Leaflet sets out the VAT arrangements applicable to electronically supplied services and Broadcasting services.

In general the normal Place of Supply of services rules apply to electronically supplied services (eServices). However an optional scheme known as the Electronic Services Scheme, provided for in Section 91 VAT Consolidation Act 2010, applies where the supplier is established outside the EU and the customers involved are non- taxable persons e.g. private individuals established in the EU. Under the terms of the scheme (see Paragraph 3.1) suppliers can opt to register for VAT in one Member State of the EU and account for VAT due there on all their supplies of eServices made within the EU.

Broadcasting services, with some exceptions, also are covered by the normal Place of Supply of Services rules. Such services do not come within the scope of the definition of eServices.

1. Electronically supplied services (eServices)
2. Place of supply rules for eServices
3. Special Scheme for Electronic Services
4. Radio and Television Broadcasting Services
5. Changes in the VAT treatment of supplies of eServices, Broadcasting Services, and Telecommunications Services supplied to non -taxable persons e.g. private individuals coming into effect from 1 January 2015
6. Further Information
7. Appendices

1. Electronically Supplied Services (eServices)

1.1 What are eServices?

An ‘eService’ is one that is delivered over the Internet (or an electronic network which is reliant on the Internet or similar network for its provision) and is heavily dependent on information technology for its supply - i.e. the service is essentially automated, involving minimal human intervention and in the absence of information technology does not have viability. The definition of electronically supplied services, transcribed from Annex 11 to the 2006 VAT Directive is contained in Section 2 of the VAT Consolidation Act 2010 as follows;

“electronically supplied services” includes -

1. website supply, web-hosting, distance maintenance of programmes and equipment,
2. supply of software and updating of it,
3. supply of images, text and information, and making databases available,
4. supply of music, films and games (including games of chance and gambling games) and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events, and
5. supply of distance teaching,
   and “electronic service” shall be construed accordingly, but where the supplier of a service and his or her customer communicate by means of electronic mail, this shall not of itself mean that the service performed is an electronic service.

See also the more detailed definition of electronically supplied services contained in Article 7 of Council Implementing Regulation of 15th March 2011 (282/2011/EU) which is reproduced in Appendix 1. In general, the use of the Internet or other electronic networks by parties to communicate with respect to transactions or to facilitate trading does not, any more than the use of a phone or fax, affect the normal VAT rules that apply. For example, where parties simply use the Internet to convey information in the course of a business transaction (e.g. email), this does not change the nature of that transaction. This differs from a supply that is completely dependent on the Internet in order to be carried out (e.g. searching and retrieving information from a database with no human intervention).

1.2 Detailed examples of electronically supplied services

Tables giving examples of transactions that are either included or excluded from the definition of ‘electronically supplied services’, are reproduced in Appendices 1 & 2.

Particular care should be taken where a service includes both electronic and other elements. Such composite or multiple supplies must generally be considered on a case-by-case basis. Where any doubt remains reference should be made to the local Revenue Office.

1.3 The VAT rate

Electronically supplied services are taxable at the standard rate in each EU Member State, unless a specific exemption applies. For example, if the ‘traditional’ forms of supply of gambling is exempt in a EU Member State, it would also be exempt in that EU Member State if it is supplied as an electronically supplied service.

2. Place of Supply Rules For Electronic Services

2.1 General

With effect from 1 January 2010 new VAT Place of Supply of Services rules came into force. Full details of the new rules are contained in the following VAT Information Leaflet;

New Intra-Community VAT Rules on Place of Supply for Services

2.2 Business-to-Business (B2B)

The general rule in B2B transactions is that the place of supply of a service (included electronically supplied services) is the place where the customer has established his or her business. In cross border transactions the business customer (taxable person) must account for the VAT under the reverse charge rule. If the supply is made to a business customer outside the EU there are no VAT implications.

2.3 Business established in the EU to a Consumer within the EU (B2C)

The Place of Supply of electronically supplied services supplied by an EU business to a private consumer in the EU is the EU Member State in which the supplier is established.

2.4 Business established in the EU to a consumer outside the EU

The Place of Supply of electronically supplied services to a non-taxable persons outside the EU is the place where that person is established, has apermanent address or usually resides. This is specifically provided for in Sections 33(5)(k) and 34 (m) , VAT Consolidation Act 2010.

2.5 Business established outside the EU to a consumer in the EU

The place of supply of electronically supplied services supplied by a non-EU business to private consumers in any EU Member State is the place where the consumer normally resides. This is specifically provided for in Section 34(l) VAT Consolidation Act 2010 which is transposed from Article 58 of the 2006 VAT Directive.

The electronic services covered by this provision are set out in Annex 11 to that Directive and in more detail in Annex 1 to Council Regulation 282/2011/EU.

See also Appendix 2 to this Leaflet for practical examples of services regarded as being electronically supplied and Appendix 3 to this leaflet for practical examples of services regarded as not being electronically supplied.

For example, if a Canadian business supplies electronic services to an Irish consumer the place of supply (and of taxation) is Ireland. Suppliers of these services are liable to register and account for VAT in every EU Member State where they have private customers. However, an optional special scheme is available whereby non-EU businesses can register in one EU Member State only. See Paragraph 3 which sets out full details of the scheme.

3. Special Scheme for Electronic Services

A special scheme called the Electronic services scheme is provided for in Section 91 of the VAT Consolidation Act 2010. It is optional and enables a non-EU supplier making supplies of electronic services to non - taxable persons e. g. private individuals within the EU to choose an EU Member State in which to register for and pay VAT in respect of all such supplies made within the EU.

3. 1 Broad outline of the special scheme

Once registered a supplier makes VAT returns to that EU Member State, declaring the VAT due on all the on-line sales to consumers within the EU. The rate of VAT is the standard rate in the country in which the consumer resides. A special on-line return form is provided under which the supplier must provide a breakdown of all electronic supplies to customers in each EU Member State. Payment is made to a designated account in the EU Member State of registration. That EU Member State re-distributes the VAT receipts to other Member States in accordance with the amounts due as declared by the supplier.

For example, an Australian business supplies on-line digital products to private customers B2C in Ireland, France and Germany. It opts to register for the special scheme in Ireland. It charges Irish VAT to its Irish customers, French VAT to its French customers and German VAT to its German customers. It registers electronically in Ireland, puts all the details on a single quarterly electronic return and pays all the VAT due to the Irish Revenue each quarter. The Irish Revenue retains the Irish VAT and distributes the French and German VAT to those countries.

3.2 What businesses are eligible to use the special scheme?

A business is eligible to use the special scheme if that business:

• supplies electronically supplied services to private consumers who reside in the EU,
• is not established within the EU, and
• is not otherwise registered (or required to be registered) for VAT in any EU Member State.

3.3 How does the scheme operate in Ireland?

The Revenue Commissioners have set up a register of non-EU suppliers who opt to register in this country under the scheme. Registration is only accessible through the Revenue Online System (ROS). Suppliers must supply certain details (specified below) to ROS in order to register under the scheme. A section on ROS, especially for non-EU customers, facilitates applicants in the registration process.

A supplier registered under the scheme is allocated an identification number (the special VAT number for electronic services supplies) and a digital certificate by ROS. Suppliers on the Irish register use their digital certificates to access the system via ROS. Suppliers must submit special VAT returns and pay Revenue the VAT due in respect of their supplies in all EU Member States including Ireland within 20 days of the end of each calendar quarter. Payment must be made in € Euro to a bank account designated by the Revenue Commissioners.

3.4 Registration - information needed and procedures

The non-EU supplier must furnish the following information to Revenue in order to register under the scheme:

• Name and postal address
• Electronic addresses including website addresses
• National tax number, if any
• A statement that the supplier is not registered for VAT within the EU
• The date from which the supply of electronically supplied services to EU consumers commences.

The information must be supplied electronically, on the registration form available on ROS. When registration is confirmed, Revenue will email the applicant his or her special VAT number, together with details on how the digital certificate is to be retrieved.

3.5 Must a business be making supplies before registering?

Not necessarily. On registration, the supplier must state the date from which the supply of electronically supplied services to EU consumers commences. For example, a supplier could register in August on the basis that the supplies would start from 1 September. Note however that nil returns must be submitted if there are no supplies in a calendar quarter.

3.6 Must a business make supplies in Ireland in order to register here?

No. Businesses who only make, or intend making, supplies under the special scheme to customers in other EU Member States may register for the special scheme in Ireland if they so wish. The VAT due in those other EU Member States will be paid to the Revenue Commissioners, who will distribute it to the relevant tax authorities.

3.7 The procedure for submitting VAT returns and making payments

The special VAT returns are due for each calendar quarter (30 September, 31 December, 31 March and 30 June) and must be submitted by the 20th of the month at the end of the quarter to which the return relates. For example, the return for the calendar quarter ending on 30 September 2012 must be submitted by 20 October 2012. The VAT due in respect of supplies in all EU Member States must be paid at the same time as the return, into a bank account designated by the Revenue Commissioners. Nil returns must also be submitted.

The special VAT return must show the following information:

• The non-EU supplier’s identification number.
• For each EU Member State where VAT is due, the total value (excluding VAT), the applicable VAT rate and the amount of VAT due at each applicable rate in respect of electronically supplied services for the quarter.
• The total VAT payable in all EU Member States.

The special VAT returns must be filed electronically on ROS for the special scheme, using the digital certificates for access. Suppliers should give both their VAT number and details on the relevant quarterly period to the bank when making payments. Receipts for moneys received will be issued to the supplier via the ROS system.

3.8 VAT on purchases

A person from outside the EU who makes supplies in Ireland under the scheme is not entitled to deduct input VAT using the VAT return. However, the supplier is entitled to claim a refund under the terms of the 13th VAT Directive (Directive 86/560/EEC) in respect of VAT paid on goods or services used for the purposes of taxable activities falling under the special scheme. Claims in respect of the VAT paid in Ireland should be made to the Revenue Commissioners under the standard 13th Directive procedures. For further information contact: unregvat@revenue.ie

3.9 Records

Suppliers registered for the special scheme must keep records of all transactions affecting their VAT liability - for example, the value and date of the transaction, the customer’s name and location, etc. These records must be kept for 10 years and must be made available electronically, on request, to the tax authorities in the EU Member State where the supplier is registered for the special scheme and to each EU Member State where the supplier’s customers reside.

3.10 Changes in details supplied or business circumstances

Suppliers under the scheme are required to notify Revenue if there are any changes in the details provided under paragraph 3.4 (name and address, websites, etc.) or if their taxable activity changes to the extent that they are no longer eligible to use the special scheme. For example, if the supplier begins to supply goods or services in the EU, he/she will be liable to register for VAT under the normal rules and will cease to be eligible for the scheme.

Revenue may exclude from the scheme suppliers who fail to comply with the provisions of the scheme.

3.11 Suppliers not registered for the special scheme in Ireland

Non-EU businesses who supply electronic services to consumers in Ireland and are registered for the special scheme in another EU Member State must pay the Irish VAT due to the tax authorities in that other EU Member State, under the terms of their Special Scheme. Such businesses must also keep records of the Irish (and other) transactions.

Non-EU businesses who supply electronic services to consumers in Ireland and are not registered for the special scheme in any EU Member State must register in Ireland and account for the Irish VAT in respect of those supplies, under the normal VAT rules. These businesses must also register and account for VAT in each and every other EU Member State where supplies are made.

3.12 Summary of VAT treatment of Electronically Supplies Services

Table 2.1 - place of supply rules for electronic services

Supplied from	Supplied to	Place of Supply
Business in Ireland	Business in Ireland	Ireland
Business in Ireland	Business in other EU State	Other EU State
Business in Ireland	Business outside EU	Outside EU (no VAT)
Business in Ireland	Private consumer in Ireland	Ireland
Business in Ireland	Private consumer in other EU State	Ireland
Business in Ireland	Private consumer outside EU	Outside EU (no VAT)
Business in other EU State	Business in Ireland	Ireland
Business in other EU State	Private consumer in Ireland	Other EU State
Business outside EU	Business in Ireland	Ireland
Business outside EU	Private consumer in Ireland	Ireland (Optional Special Scheme available, see Paragraph 3.1 for details)

4. Radio and Television Broadcasting Services

4.1 The place of supply rules

The normal place of supply of services rules apply in the case of supplies of Radio and Television Broadcasting Services.

Supplies made to taxable persons are subject to VAT where that taxable person has established his/her business and in the case of cross border transactions the taxable person receiving the service accounts for VAT under the reverse charge procedure. For example VAT registered pubs and clubs - who buy in broadcasting services from suppliers established in other EU Member States or outside the EU (by means of a satellite dish and decoder) must account for VAT using the reverse charge procedure.

Supplies made to non- taxable persons e.g. private individuals by suppliers established in the EU are subject to VAT in the Member State where the supplier is established.

Supplies made to non- taxable persons in Ireland by supplers established outside the EU are, under the use and enjoyment provisons in Section 35 (3) VAT Consolidation Act 2010, subject to VAT in Ireland. In such cases the supplier must register and account for VAT here on the supplies. The Electronic services scheme referred to at Paragraph 3. above does not apply in the case of broadcasting services.

5. Changes in the VAT treatment of supplies of eServices, Broadcasting Services, and Telecommunications Services supplied to non -taxable persons e.g. private individuals coming into effect from 1 January 2015

Article 58 of the 2006 VAT Directive has been amended to provide that, with effect from 1 January 2015, the place of supply of eServices, Broadcasting Services and Telecommunications Services to a non - taxable person (e.g. a private individual) will be where that person is established, has his permanent address or usually resides.

• EU Scheme - Suppliers established in the EU or suppliers established outside the EU with a fixed establishment in the EU.

In the case of suppliers established in the EU or suppliers established outside the EU with a fixed establishment in the EU, they will still be required to account for VAT on supplies made to non taxable persons e.g. private individuals. However, the VAT rate applicable will be the relevant rate of the Member State where the customer is established, has his permanent address or usually resides. Under an arrangement called the Mini One Stop Shop (MOSS) instead of having to register in all Member States the supplier will have the option of declaring and paying the VAT due for all Member States in the Member State where their business is established. This Member State will be referred to as the Member State of identification. (MSI)

• Non EU Scheme - Suppliers established outside the EU with no fixed establishment in the EU.

At present suppliers of e-services can opt to use the existing special scheme for e-services but suppliers of broadcasting services and telecommunications services must register for VAT in each Member State where supplies are made. With effect from 1 January 2015, non-EU established suppliers of eservices, broadcasting services and telecommunications services to non-taxable persons in the EU will have the option of declaring and paying the VAT due for all Member States using the Mini One Stop Shop in any Member State of their choosing.

Council Implementing Regulation 282/2011 will be amended to cover the practical application of the amended Article 58 of the 2006 VAT Directive. Further details on the new arrangements will be issued closer to the operative date 1 January 2015.

6. Further Information

Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue Office responsible for the taxpayer’s affairs. Contact Details for Revenue Offices.

This leaflet is issued by
VAT Interpretation Branch,
Indirect Taxes Division,
Dublin Castle.

January 2013

Appendices

Appendix 1. Definition of Electronically Supplied Services as set out in Article 7 of Council Implementing Regulation 282/2011/EU.

1. ‘Electronically supplied services’ as referred to in Directive 2006/112/EC shall include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.
2. Paragraph 1 shall cover, in particular, the following:
   1. the supply of digitised products generally, including software and changes to or upgrades of software;
   2. services providing or supporting a business or personal presence on an electronic network such as a website or a webpage;
   3. services automatically generated from a computer via the Internet or an electronic network, in response to specific data input by the recipient;
   4. the transfer for consideration of the right to put goods or services up for sale on an Internet site operating as an online market on which potential buyers make their bids by an automated procedure and on which the parties are notified of a sale by electronic mail automatically generated from a computer;
   5. Internet Service Packages (ISP) of information in which the telecommunications component forms an ancillary and subordinate part (i.e. packages going beyond mere Internet access and including other elements such as content pages giving access to news, weather or travel reports; playgrounds; website hosting; access to online debates etc.);
   6. the services listed in Annex I.
3. Paragraph 1 shall not, in particular, cover the following:
   1. radio and television broadcasting services;
   2. telecommunications services;
   3. goods, where the order and processing is done electronically;
   4. CD-ROMs, floppy disks and similar tangible media;
   5. printed matter, such as books, newsletters, newspapers or journals;
   6. CDs and audio cassettes;
   7. video cassettes and DVDs;
   8. games on a CD-ROM;
   9. services of professionals such as lawyers and financial consultants, who advise clients by e-mail;
   10. teaching services, where the course content is delivered by a teacher over the Internet or an electronic network (namely via a remote link);
   11. offline physical repair services of computer equipment;
   12. offline data warehousing services;
   13. advertising services, in particular as in newspapers, on posters and on television;
   14. telephone helpdesk services;
   15. teaching services purely involving correspondence courses, such as postal courses;
   16. conventional auctioneers’ services reliant on direct human intervention, irrespective of how bids are made;
   17. telephone services with a video component, otherwise known as videophone services;
   18. access to the Internet and World Wide Web;
   19. telephone services provided through the Internet.

Appendix 2

Practical examples of services regarded as being electronically supplied. (See Annex II to VAT Directive 2006 and Annex 1 to Council Implementing Regulation 282/2011/EC.)

Example 1: Web site supply, web-hosting and distance maintenance of programmes and equipment Website hosting and webpage hosting Automated, online distance maintenance of programmes Remote systems administration Online data warehousing (i.e. where specific data is stored and retrieved electronically) Online supply of on-demand disc space

Example 2: Software and updating thereof Accessing or downloading software (e.g. procurement/accountancy programmes, anti-virus software) plus updates. Bannerblockers (software to block banner adverts showing). Download drivers, such as software that interfaces PC with peripheral equipment (e.g. printers). Online automated installation of filters on websites. Online automated installation of firewalls.

Example 3: Images Accessing or downloading desktop themes Accessing or downloading photographic or pictorial images or screensavers

Example 4: Text and information The digitised content of books and other electronic publications Subscription to online newspaper and journals Weblogs and website statistics Online news, traffic information and weather reports Online information generated automatically by software from specific data input by the customer, such as legal and financial data (e.g. continually updated stock market data) The provision of advertising space (e.g. banner ads on a website/webpage)

Example 5: Making databases available Use of search engines and Internet directories.

Example 6: Music Accessing or downloading of music onto PCs, mobile phones, etc. Accessing or downloading of jingles, excerpts, ringtones, or other sounds.

Example 7: Films Accessing or downloading of films.

Example 8: Broadcasts and events - political, cultural, artistic, sporting, scientific and entertainment Web-based broadcasting that is only provided over the internet or similar electronic network and is not simultaneously broadcast over a traditional radio or television network.

Example 9: Games, including games of chance and gambling games Downloads of games onto PCs, mobile phones, etc. Accessing automated on-line games which are dependent on the internet, or other similar electronic networks, where players are remote from one another.

Example 10: Distance teaching Teaching that is automated and dependent on the Internet or similar electronic network to function, including virtual classrooms. Workbooks completed by pupil on-line and marked automatically, without human intervention.

Example 11: items not explicitly listed in examples 1-10. Online auction services (to the extent that they are not already considered to be web-hosting services under example 1) that are dependent on automated databases and data input by the customer requiring little or no human intervention (e.g. online marketplace or online shopping portal). Internet Service Packages (ISPs) in which the telecommunications component is an ancillary and subordinate part (i.e. a package that goes beyond mere Internet access, comprising various elements (e.g. content pages containing news, weather, travel information; games fora; web-hosting; access to chat-lines etc.))

Appendix 3

Practical examples of services not regarded as being electronically supplied

Example 1

A supply of A good, where the order and processing is done electronically A CDROM, floppy disc or similar tangible media Printed matter such as a book, newsletter, newspaper or journal A CD or audio cassette A video cassette or DVD A game on CDROM or DVD

Example 2

A supply of services of lawyers and financial consultants, etc. who advise clients through email interactive teaching services where the course content is delivered by a teacher over the Internet or an electronic network (i.e. via remote link)

Example 3

A supply of Physical repair services of computer equipment Off-line data warehousing services Advertising services, such as in newspapers, on posters and on television Telephone helpdesk services Teaching services involving correspondence courses such as postal courses Conventional auctioneers’ services reliant on direct human intervention, irrespective of how bids are made (e.g. in person, via internet or telephone)

Example 4

A supply of a radio and television broadcasting service provided over the Internet or similar electronic network, simultaneous to the same broadcast being provided over traditional radio or television network.

Example 5

supply of Videophone services (i.e. telephone services with a video component) Access to the internet and World Wide Web

Telephony (i.e. telephone service provided through the internet)