The legislation governing VAT on services provided to companies located outside Ireland is complicated and numerous different scenarios can occur depending on the place of supply of the service and the nature of the service provided. We explain two broad scenarios below, and we consider that the service you provide comes under the latter.
The general rule regarding VAT on services is that services are taxable at the place where the supplier has established his or her business. This will apply regardless of whether the business customer is in the European Union (EU) or not. Generally, where the business customer is located outside Ireland, the Irish supplier will not charge Irish VAT on its services. Instead, the business customer will self-account for the VAT in their State. The general rules are provided below for your information.
| 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 |
However there are some specific rules regarding VAT on services related to an immovable property which is explained below.
2. VAT on services related to immovable property
Under European VAT legislation, the place of taxation of services connected with immovable property is defined by a particular rule laid down under Article 47 of the VAT Directive. The purpose of a specific place of supply rule on services connected with immovable property is to ensure taxation occurs at the place of consumption of the service. This rule provides that the place of supply of services connected with immovable property shall be where the immovable property is located and applies regardless of whether the service is supplied to a taxable person (business customer, B2B) or to a non-taxable person (private individual who is the final consumer, B2C).
The above rule only applies where the service supplied is directly related to a specific property. It does not apply if the service in question only has an indirect connection with property, or if the property related service is only an incidental component of a more comprehensive supply of services. We understand that Seha does MEP consultancy and design, which in our opinion will be considered a service related to immovable property. We have however attached the specific revenue guidance on this, and you are advised to carefully consider and document your determination.
Taxable person
The concept of a taxable person covers anyone who independently carries out an economic activity, even if that person is not identified for VAT purposes, but it also includes a non-taxable legal person identified for VAT purposes [Article 43 of the VAT Directive].
Obligations of suppliers providing services connected with immovable property
Whenever a supplier is supplying services covered by the EU VAT Directive in a Member State, he is in general liable for the payment of the VAT due to the tax authorities of the Member State where the immovable property is located. As a consequence, the supplier normally has to register for VAT purposes and fulfil all related obligations in that Member State. If a service is connected with several immovable properties located in different jurisdictions, the supplier will be liable for paying the relevant VAT due and register for VAT purposes in all these jurisdictions.
However, each Member State may provide that, when the supplier is not established in its territory, the person liable for payment of the VAT due is the person to whom the service is supplied. For instance in Ireland generally, where a foreign trader supplies services in this category to a taxable person who carries on a business in the State, or to a public body, then the foreign trader does not have to register for VAT in the State. Instead, the taxable person or public body must account for the VAT under the reverse charge mechanism. Where a foreign trader supplies the services to final consumers (B2C), those traders are obliged to register for VAT in the State. However the rules could differ from one member state to the other and business operators should therefore verify whether this option is applied in the Member States where they are not established but intend to operate.
Reverse charge on VAT
If a reverse charge mechanism is applicable in the state of the customer to whom you are supplying services, you may issue you an invoice without charging VAT and the obligation is on your customer to account for VAT under a ‘reverse charge mechanism’. This is where they account for the output tax, while simultaneously making a claim for an input credit on the same VAT return (if they are eligible to claim input credit). If they are eligible for a simultaneous input credit this will generally leave your customer VAT neutral on this particular transaction.
