Place of supply rules for services

Updated on February 8, 2022

Overview

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

Defining a service for VAT

services are often provided in one of two locations:

for services, exceptions to the basic rule of supply

Irish businesses who sell goods or services to customers outside of the country are subject to VAT.

What is a service for VAT purposes?

A service is any business activity that is not the delivery of commodities for the purposes of the Value Added Tax (VAT).

The following are examples of the kind of services typically provided:

giving up a right to do something; granting and giving up one’s right to do something; hiring (other than hiring-purchase) or leasing goods electronically supplied services, including digital goods delivered online and the physical supply of customised software; and, finally, refraining from doing something (toleration of a situation).
the return of transportable objects constructed from customer-supplied materials after processing.

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)

If you’re delivering business-to-business services (B2B), you’ll need to know where your customers are located. Either the business customer is located within or outside of the European Union (EU).

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

whether or not there is a set location for that person’s business, the site where that person’s permanent address or habitual place of residence is located
There are exceptions to this rule where the business customer is located outside of Ireland. When it comes to VAT, the business customer will take care of the paperwork in their own state.

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.

If the reverse charge arrangement does not apply, the supplier must register and account for 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.

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). If you misidentify your customer and do not charge VAT, you will be responsible for the tax. If you’re the subject of a Revenue audit, you could potentially be hit with interest and penalties.

Identification of a business customer

You must comply with the following rules if you are providing services to a business customer in another EU Member State:

get the VAT number of the company customer and make sure it is legitimate
invoice with a note noting that a reverse charge will be applied and include the customer’s VAT number
A letter from the tax authorities should be obtained if a new business customer does not have a valid tax identification number[1].
Find out if the supply is exempt for VAT Information Exchange System (VIES) reasons and include it on the VIES return if it’s chargeable.