VAT on services

Updated on April 28, 2022

Information on the VAT treatment of various categories of services and the location of supply laws for services.

Place of supply rules for services

Overview

The laws for Value-Added Tax (VAT) on services are outlined in this section, which includes:

general place of supply rules for services exceptions to the general place of supply rules for services
Irish traders that provide services to customers in other countries are subject to VAT obligations.

What is a service for VAT purposes?

A service is any business activity that is not a supply of products for the purposes of Value Added Tax (VAT).

The following are examples of typical services:

the hiring (other than hire-purchase) or leasing of goods electronically supplied services, including digitized goods delivered online and the physical supply of customized software the granting and surrendering of a right to the services of caterers, mechanics, plumbers, accountants, solicitors, consultants the hiring (other than hire-purchase) or leasing of goods
the return of transportable goods made out of materials supplied by a client (after processing).

The general place of supply rules for services

Depending on whether the recipient is a business or a consumer, there are two general location of supply regulations. Certain exclusions or the use and enjoyment rules, however, can override these general norms.

Supply of services to a business (B2B)

The site of supply for business to business (B2B) services is the location where the business receiving the services is located. This is true whether or not the business customer is based in the European Union (EU).

The business customer to whom the services are provided may be located in one of the following locations:

Where he or she has established their business, where that person’s fixed establishment is located, or if there is no such place of business or fixed establishment, where he or she has a permanent address or habitual place of residence.
When a company customer is based outside of Ireland, the Irish provider will often not charge Irish VAT on its services. Instead, the business customer will be responsible for self-accounting for VAT in their state.

Example 1: XYZ Ltd, a company based in Ireland, provides a service to B Ltd. B Ltd is based in France and does not have a permanent location elsewhere.

The supply location is France, which is where B Ltd is based. XYZ Ltd does not charge VAT in Ireland. B Ltd, on the other hand, self-accounts for French VAT in its own VAT return. This supply is exempt from Irish VAT.

Explanations 2 and 3

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

The place of supply for business to consumer (B2C) services is the location where the supplier:

has established a set establishment for their business, or in the absence of such a fixed establishment, the place where he or she has a permanent address or habitual abode.
If the consumer is located outside the EU, there are certain services where the site of supply is outside Ireland.

Example No. 4

The following is a summary of the rules governing the location of supply services.
The table below summarises the rules governing the location of service supply (subject to certain exceptions or use and enjoyment rules).

The following is a summary of the rules governing the location of service provision.
Supplier’s country of origin is the same as the customer’s country of origin.
Customer’s current situation
Person obligated to account for Irish VAT at the point of supply
Ireland, whether for business or pleasure, Ireland, Ireland, Ireland, Ireland, Ireland, Ireland, Ireland, Ireland
Other EU Member State Company Other EU Member State No Irish VAT
Ireland
Ireland, a private EU state, is a supplier of Ireland.

Outside the European Union

Business

Outside the European Union

There is no VAT in Ireland.

Ireland

Outside the European Union

Private

It is dependent on the nature of the service.

Provider (if VAT occurs)

Other EU Member States

Ireland

Business

Ireland

a company’s client

Other EU Member States

Ireland

Private

Other EU Member States

There is no VAT in Ireland.

Outside the European Union

Ireland

Business

Ireland

a company’s client

Outside the European Union

Ireland

Private

It is dependent on the nature of the service.

Depending on the nature of the service – and whether or not it is taxable in the state – the supplier.

Exceptions to the general place of supply rules

The general place of supply rules that link the place of supply to where the service is performed have certain exceptions.

Unless protected by the reverse charge agreement, the provider will be required to register and account for VAT in the European Union (EU) Member State of supply.

From July 1, 2021, all firms delivering these services cross-border to consumers (B2C) in the EU can use the VAT One Stop Shop (OSS) system to complete their VAT registration needs.

The table below summarises the exceptions to the general location of supply requirements for services.

Exceptions to the general place of supply requirements for services are listed below.
Service Types
The rule of supply location
Provision of services relating to movable property

The location of the commodities is known as the place of supply. Where the service provider is outside Ireland and the work is carried out in Ireland, VAT is accounted for by the Irish business recipient on a reverse charge basis.

Services for passenger transportation (B2B and B2C)

Passenger transportation takes happens at the point of supply.

Goods transportation (B2C)

The place or places where the transportation takes place are referred to as the supply point.

Transport of products inside a community (B2C)

The point of departure is the point of supply.

Transport of products inside a community (B2B)

The customer’s base of operations is the place of supply.

Cultural, artistic, sports, scientific, educational, and entertainment services, or services of a similar nature, are provided (B2B)

When it comes to event admissions, the site of supply is the location where the event is held.

Cultural, artistic, sports, scientific, educational, and entertainment services, or services of a similar nature, are provided (B2C)

The general rule does not apply in the case of B2C services and auxiliary services related to an event, and the place of supply of the services is where the event takes place.

Ancillary transport services, valuations, work on movable property supplied (B2B)

With reverse charge, the general rule applies.

Ancillary transportation services, moveable goods valuations, work on movable property supplied, and contract work are all available (B2C)

The location where the services are physically performed is referred to as the place of supply.

In general, restaurant and catering services.

The location where those services are physically performed is referred to as the place of supply.

Within the community, restaurant and catering services are available for consumption on board ships, planes, and trains.

Place of supply is the first scheduled point of departure of the ship, plane or train (e.g. the State if the first point of departure is the state).

Hiring out of means of transport (short-term)

When renting out a vehicle for a short period of time, the point of supply is where the vehicle is placed at the customer’s disposal.

Long-term rental of modes of transportation (B2C)

The customer’s place of supply is the location where he or she is established, has a permanent address, or normally dwells. However, for long-term pleasure boat rentals, see the section below.

Long-term rental of a pleasure boat (B2C)

The place where the supplier puts the boat at the customer’s disposal provided that the supplier’s place of business or fixed establishment is in that place.

Telecommunications, broadcasting or electronically supplied services (TBE services). (B2C), provided by non-EU based suppliers

The place of supply is where the customer is established or has a permanent address or usually resides; provided that the TBE service is not connected with immovable goods.

Telecommunications, broadcasting or electronically supplied services (TBE services), (B2C), provided by EU based suppliers

Subject to the B2C €10,000 threshold, the place of supply is where the supplier is established, has a fixed establishment or permanent or usual address. The supplier has an option to have the place of supply treated as in the row above.

Certain specified services to customers outside the EU (B2C)

The place where the customer is established, has a permanent address or usually resides.

Intermediary services (B2C)

The place where the underlying transaction is supplied

VAT obligations of Irish traders when supplying services abroad

When providing services abroad, you must confirm your customer’s status (commercial or private). You will be obliged to pay VAT if you erroneously identify your customer and do not charge VAT. In the case of a Revenue audit, you may be subject to interest and penalties.

Identification of a business customer

When you provide services to a business customer in another European Union (EU) Member State, you must comply with the following requirements:

get and check the authenticity of the business customer’s Value-Added-Tax (VAT) number
enter the customer’s VAT number on the invoice and keep records of the transaction issue an invoice indicating the transaction will be reversed
If a business customer is a new business and a VAT number is not available, seek a letter from the tax authorities[1].
If the supply is taxable, determine if it is exempt in the other Member State for the purposes of the VAT Information Exchange System (VIES). If the supply is taxable, include it in the VIES return.
A VIES statement will be required to provide details of the services provided as well as the new business’s exact VAT number.
Returning to the text
An EU VAT number can be verified on the EU Commission website or by contacting the VIMA office.

Verifying the status of your customer

It is assumed that you operated in good faith when validating your customer’s status. To do so, you must first determine whether or not the customer is a taxable individual.

This should be accomplished by:

getting their VAT number and verifying its authenticity, or collecting other documentation that the customer is a taxable or non-taxable legal entity for VAT purposes

Supplies to business customers outside the EU (B2B)

In general, services provided to business customers outside of the EU are exempt from VAT. You must, however, obtain appropriate proof and evidence that a purchaser is a taxable person.

You’ll need the following items:

Proof of the customer’s place of business outside of the EU.
Evidence that the customer is a taxable individual. For instance, appropriate proof from your consumer demonstrating that he or she is a taxable person.
The following items can be used to support the VAT number:

details from the customer’s tax authorities confirming that the client is a taxable person the customer’s order form with their business address and trade registration number a printout of the customer’s website confirming that the customer is engaged in economic activity

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

Certain B2C (business-to-consumer) supplies outside the EU are VAT-free. You will, however, need to show confirmation that the buyer is based outside of the European Union (EU). You must double-check the information provided by the customer. Pre-authorization checks on credit cards can confirm the address linked with a card number.