VAT Reverse Charging – For Services Outside Ireland

Dear Member,

It has come to our attention that more and more members are availing of services or considering services from outside the state. i.e. The United Kingdom (UK).

This communication is just to highlight a possible issue for those members who may not be registered for VAT, as availing of these services could give rise to a reverse charging issue with Revenue.

Where business services are received by an Irish business from suppliers outside of Ireland (e.g. from the UK or from other EU countries) the place of supply for VAT purposes is where the business customer is established.

If a UK supplier provides software subscription to an Irish business customer, the place of supply for VAT purposes is Ireland (i.e. where the business customer is established). The Irish business customer would therefore self-account for Irish VAT on all services received outside of Ireland by including in Box T1 of their VAT return. This is known as the reverse charge basis.

If the Irish business customer is not already registered for VAT (e.g. because the Irish business customer provides a vat exempt service – e.g. financial brokerage) it is obliged to register for VAT in its capacity of being in receipt of business services where reverse charge applies.

A lot of members are not registered for VAT. This may cause an issue for members who use these services from outside the state and could lead to fines with interest and penalties for not paying VAT on these services, whether it be now or in the future.

If you have any queries and are unsure whether this issue would affect you, we recommend seeking guidance from your accountant on this matter.

Please find a link below to Revenue information on reverse charge and self-accounting for VAT purposes:

https://www.revenue.ie/en/vat/what-is-vat/reverse-charge-self-accounting.aspx

If you have any further queries, please contact David Holton david@brokersireland.ie.