Exceptions to the general place of supply rules

Updated on April 15, 2022

Overview

In this section, the VAT laws for services are laid out, including:

What is a service in the context of VAT?

services are often provided in one of two locations:

Service-specific exemptions to broad rules about where goods and services should be supplied

Irish businesses that provide services to customers in other countries are subject to VAT obligations.

What is a service for VAT purposes?

For VAT purposes, a service is any economic activity that is not a supplier of commodities, such as a consulting firm.

Among the most common offerings are the following:

services provided by caterers, plumbers, accountants, lawyers, and consultants the granting and surrendering of a right the hiring (other than hire-purchase) or leasing of goods electronically supplied services, including digital goods delivered online and the physical supply of customized software
The return of moveable items, created from materials supplied by a customer, after processing.

The general place of supply rules for services

For both businesses and consumers, there are different rules about where the goods should come from. Certain exceptions or use and pleasure regulations may override these general guidelines.

Supply of services to a business (B2B)

Business-to-business services are provided at a company’s location. This is known as the place of supply (PoS). No matter if they are located in the European Union or not, this applies.

A business customer’s location can be any one of the following:

He or she founded their business at the same location as their regular establishment, or in the absence of a set business location, the location of their customary dwelling.
Irish suppliers often don’t charge Irish VAT on their services when the business customer is based outside of Ireland. Business customers, on the other hand, will be responsible for keeping track of their own State’s VAT.

XYZ Ltd, a corporation based in Ireland, provides a service for B Ltd. There is no fixed location for B Ltd outside of France.

B Ltd is based in France, which is where the supply chain will meet. XYZ Ltd does not collect VAT from customers in the country where it is based in. Instead, B Ltd. submits its own VAT return to self-account for French VAT. This supply is exempt from Irish VAT.

An example of a non-business customer receiving services (B2C)
Business-to-to-consumer (B2C) service providers define the location of supply as the location where they:

fixed establishment or, in the absence of such place of business, the place where the person has a regular place of residence or a permanent address.
If the customer is outside the European Union, there are some services where the supplier location is outside Ireland.

The following is an example.

Summary of the place of supply services rules

 Summary of the place of supply of services rules
Country of establishment of supplier Country in which customer established Status of customer Place of supply Person liable to account
for 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 Outside EU No Irish VAT
Ireland Outside EU Private Depends on nature of the Service Supplier (if VAT occurs)
Other EU State Ireland Business Ireland Business customer
Other EU State Ireland Private Other EU State No Irish VAT
Outside EU Ireland Business Ireland Business customer
Outside EU Ireland Private Depends on nature of the Service Depends on nature of the service – if taxable in the State – the supplier

Exceptions to the general place of supply rules

It is possible for a service to be provided in a location other than the place of supply.

Unless the provider is covered by the reverse charge arrangement, the supplier must register and account for Value-Added Tax (VAT) in the EU Member State of supply.

The VAT One Stop Shop (OSS) plan will allow all EU enterprises who provide these services cross-border to consumers (B2C) to complete their VAT registration duties as of July 1, 2021.

The exceptions to the general location of supply regulations for services are outlined in the following table.

The following is a list of service-specific exceptions to the general rule of supplier location.
Providers of this service
The rule of supply is based on location.
Offering services related to non-moving products

An item’s location determines its place of supply. When a service provider is located outside of Ireland but the work is completed in Ireland, the Irish business recipient is responsible for the VAT. This is known as a reverse charge.

Services for the transportation of passengers (B2B and B2C)

Passenger transportation takes place at the supply location.

Goods transportation (B2C)

The area or sites where the transportation takes place is known as the supply location.

The movement of products within a single neighborhood (B2C)

The source of supply is the destination.

The movement of goods within a community (B2B)

The location of the supplier is determined by the location of the client.

providing or arranging for the provision of arts, athletics, sports, scientific research, education, and recreation (B2B)

In the case of event admissions, the place of supply is the location of the event itself.

providing or arranging for the provision of arts, athletics, sports, scientific research, education, and recreation (B2C)

Services and ancillary services provided at an event are exempt from the general rule of supply, and the location of supply is determined by that event.

Provided ancillary transportation and valuating services, as well as work on movable property (B2B)

Reverse charge is the general rule.

ancillary transportation services, moveable goods valuations, work on movable property supplied, and contracting services (B2C)

The location where the services are rendered is known as the “place of supply.”

Generally speaking, the services of restaurants and caterers.

The location where those services are actually performed is known as the “place of supply.”

Catering and restaurant services for use onboard ships, planes, and trains while in the community.

The ship, plane, or train’s first scheduled departure place is known as the supply location (e.g. the State if the first point of departure is the state).

renting a car or other mode of transportation (short-term)

The site of supply for short-term rentals of transportation is where the vehicle is made available to the consumer.

Using a long-term mode of transportation (B2C)

The customer’s place of residence is where the supply is coming from. However, long-term boat rentals are detailed further down the page.

Long-term use of a pleasure boat (B2C)

Wherever the supplier stores the boat until the customer needs it, as long as the supplier has a physical presence there.

An electronic or telecommunications-related service (TBE services). Suppliers outside of the EU (B2C)

As long as there are no immovable objects involved, the customer’s permanent address or regular residence serves as the supply location.

Suppliers in the EU that provide B2C telecommunications, television, and electronic services

The site of supply is where the provider is established, has a stable establishment, or has a permanent or regular address, provided that the B2C €10,000 barrier is met. The supplier can choose to have the location of supply considered as in the preceding row.

Customers outside of the EU can only receive certain services (B2C)

For example, a customer’s place of residence.

intermediary services (B2C)

The location where the transactional data is stored.

VAT obligations of Irish traders when supplying services abroad

When providing services abroad, you must verify the legal standing of your customer (whether they are a business or an individual). You’ll be on the hook for VAT if you don’t charge it because you identified your customer improperly. In the event of a Revenue audit, you could be hit with interest and fines as well.

Identification of a business customer

If you provide services to a company in another EU member state, you must comply with the following requirements:

The business customer’s VAT number should be obtained and verified for authenticity.
keep records of the transaction and include the customer’s VAT number on an invoice indicating that a reverse charge will be applied
A letter from the tax authorities may be requested if a new business customer does not have a valid tax identification number[1].
For VAT Information Exchange System (VIES) purposes, determine if a supply is exempt in the other Member State. If it is taxable, indicate the supply in your return.
A VIES statement will be required to show the exact VAT number of the new business and details of the services provided.
Returning to the original text.
The EU Commission website or the VIMA office can be used to verify an EU VAT number.

Verifying the status of your customer

Your good faith is presumed when verifying the status of your consumer. The first step is to determine whether the customer is a taxpayer.

This must be accomplished by:

Obtaining and verifying the validity of the client’s VAT number or other proof that proves that the customer is a taxable person or a non-taxable legal person for VAT purposes.

Supplies to business customers outside the EU (B2B)

VAT does not apply to services provided to businesses outside the EU. The customer must be shown to be a taxable individual, but you must have appropriate verification of this.

The following must be obtained:

Proof of the customer’s location outside of the EU.
Evidence that the customer is a tax-paying individual. Taxpayer identification information from your consumer, for example.
The proof of the VAT number can be bolstered by:

A printout of the client’s website, which shows that the customer is engaged in an economic activity, is required to prove that the customer is a taxable person.

Supplies to non-business customers outside the EU (B2C)

B2C (business-to-consumer) purchases outside the EU are not subject to VAT. Please give evidence that the customer is based outside of Europe, though (EU). Any data that you receive from a customer must be checked for accuracy. Checking the address connected with a credit card number via pre-authorization checks is possible.