Place of supply rules for services

Updated on April 12, 2022

VAT obligations of Irish traders when supplying services abroad

Whether you’re providing services to a business or a private individual, you need to verify their legal status. If you misidentify your customer and do not charge VAT, you will be responsible for the tax. In the event of a Revenue audit, you may also be subject to interest and penalties.

Identification of a business customer

If you provide services to a company in another EU member state, you must:

verify the validity of the business customer’s Value-Added Tax (VAT) number
invoice with a note noting that a reverse charge will be applied and include the customer’s VAT number
In the event that a VAT number is not yet available for a new business customer, request a letter from the tax authorities.
A VIES return must be filed if a supply is taxed in one Member State but not the other.
It will be necessary to submit a VIES statement detailing the services provided and the exact VAT number for the newly formed company.
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The EU Commission website or the VIMA office can be used to verify an EU VAT number.

Verifying the status of your customer

It is assumed that you operated in good faith when validating your customer’s status. In order to achieve this, you must first determine whether or not the customer is a taxable individual.

This should be carried out by:

Finding out if the customer is a taxable or non-taxable legal entity for VAT purposes by verifying their VAT number and/or other verification.

Supplies to business customers outside the EU (B2B)

In most cases, VAT is not charged on services provided to customers outside the European Union. Even if the buyer isn’t taxed, you’ll need to gather enough documentation and proof.

The following must be obtained before you can proceed:

Customers outside of the European Union must provide proof of their legal residency.
The customer’s tax identification number. Enough proof from your consumer, for example, to establish that they are subject to taxation.
There are a number of additional ways to demonstrate the VAT number, including:

customers must provide proof of their business status, such as a copy of their order form or a printout of their website, to prove that they are legally obligated to pay taxes to their government.

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

Certain B2C (business-to-consumer) supplies outside the EU are VAT-free. If the customer is outside the European Union, you’ll need to give proof of that fact (EU). You must validate the customer’s details before you can serve them. Pre-authorization checks for credit cards can validate the address linked with a card number.

Overview

Value-added tax (VAT) laws for service supplies are outlined in this section.

services for VAT purposes, the general place of supply rule for services, and exceptions to the general place of supply rule for services are discussed in this article
Irish businesses who sell goods or services to customers outside of the country are subject to VAT.

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 services:

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 customised software
The return of movable items, manufactured from materials supplied by a customer, that have been processed.

General place of supply rules for services

Depending on whether the recipient is a business or a consumer, there are two general supply regulations. Exceptions to these general norms, as well as rules governing how to use and appreciate the resource, may override them.

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). This holds true regardless of whether the business customer is located within or outside of the European Union (EU).

The business customer’s location can be any 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.
In most cases, the Irish supplier will not charge Irish VAT on its services if the business customer is based outside of Ireland. When it comes to VAT, the business customer will have to pay the tax in their own State.

XYZ Ltd, a corporation based in Ireland, provides a service for B Ltd. B Ltd was founded in France and does not have a permanent location outside of the country.

B Ltd’s headquarters are located in France, which serves as the source of supply. Ireland doesn’t charge VAT to XYZ Ltd. As a result, B Ltd is responsible for paying the French VAT on its own in its VAT return. This supply is exempt from Irish VAT.

Exhibits 2 and 3

Supply of services to a non-business consumer (B2C)

The supplier’s location is the point of supply for services provided to businesses and consumers (B2C).

who has established their firm and has a set location, or if they don’t, the location of their typical residence or their permanent mailing address.
Depending on the customer’s location outside of the EU, some services may be provided from a location outside of Ireland.

Case Study No. 4

Summary of the place of supply services rules

Here’s a quick look at the rules governing where services can be provided (subject to certain exceptions or use and enjoyment rules).

An overview of the rules governing where services are provided
Country of origin of supplier Country of origin of customer.
Customer’s current situation
Place of supply Responsibilities of the Irish VAT Accountant
Ireland Ireland Ireland Supplier Ireland Ireland Ireland Business or Personal
Irish VAT does not apply to any business conducted outside of the EU.
Ireland
Private Ireland Suppliers from other EU Member States

Outside the EU

Business

Outside the European Union (EU)

Ireland does not impose a Value Added Tax (VA

Ireland

Outside the European Union (EU)

Private

It is determined on the type of service provided.

The vendor (if VAT occurs)

State of the EU

Ireland

Business

Ireland

A customer of a company

State of the EU

Ireland

Private

State of the EU

Ireland does not impose a Value Added Tax (VA

Outside the European Union (EU)

Ireland

Business

Ireland

A customer of a company

Outside the European Union (EU)

Ireland

Private

It is determined on the type of service provided.

If the service is taxable in the State, the supplier is responsible for paying the tax.

Exceptions to the general place of supply rules

Rules for determining where goods and services are supplied can be broken down into exceptions.

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 where the supply is made.

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 table below summarises the exceptions to the general rule of place of supply for services.

Summary of the exceptions to the general place of supply rules for services

 

Type of Service Place of supply rule

Provision of services related to movable property

The location of the items is known as the supply location. When a service provider is located outside of Ireland but the job is completed in Ireland, the recipient company in Ireland is responsible for the VAT.

Providers of passenger transportation (B2B and B2C)

Passenger transportation takes happen at the point of supply.

the movement of cargo (B2C)

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

Transportation of products inside the community (B2C)

The supply chain begins and ends at the source.

Transporting commodities inside a same community (B2B)

The customer’s location is the supply location.

Offerings in the fields of art and culture as well as education and entertainment (B2B)

Admissions to an event are sold at the venue where the event will be held, which is the source of supply.

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

The general rule does not apply to B2C services and ancillary services provided in connection with an event, and the site of supply of the services is the event.

Provided ancillary transportation and valuing services, as well as work on moveable property (B2B)

The general rule of reverse charging is in effect here.

Supplementary transport and transportation services; valuations of moveable assets; contract work on movable property; (B2C)

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

Catering and dining establishments in general.

There is a physical location where these services are really performed.

All meals served on board ships, aircraft and trains while in the community are included in the service

The first scheduled point of departure for a ship, plane, or train is referred to as the “place of supply” (e.g. the State if the first point of departure is the state).

Making use of a variety of modes of transportation (short-term)

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

Long-term use of rented transportation (B2C)

Customer establishment, a permanent address, or the normal residence determines the location of supply. However, long-term boat rentals are detailed further down the page.

Long-term use of a pleasure boat (B2C)

if the supplier’s place of business or fixed establishment is located in the location where the boat is made available to the customer.

Communications, broadcasting, and other electronic services (TBE services). Suppliers based outside of the EU provide (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 place of supply is where the provider is established, has a stable establishment, or has a permanent or regular address, if the B2C €10,000 barrier is met. It is up to the supplier whether or not the location of supply is considered as shown in the preceding row.

a specific set of services provided to clients outside the European Union (B2C)

For example, a customer’s place of residence.

Services provided by other parties (B2C)

Location where the transactional data is stored.