Should VAT be charged to Ireland-based company?

0
0

A client who is based in the UK provides services to an Ireland-based company. Client is now nearing the £85K revenue threshold and wants to voluntarily register for VAT.

Should the client begin charging VAT to the company based in Ireland?

Marked as spam
Posted by al-fn (Questions: 36, Answers: 44)
Asked on 6 June 2020 11:59 am
35 views
0
Private answer

First we need to understand which Ireland we are talking about. If it is Northern Ireland, it is governed by the HMRC. In this case, the scope of VAT would be the following and would be charged in normal manner: there is a supply of qualifying goods and services by a registered person within the borders of United Kingdom (including Northern Ireland) with objective of furthering its business.

However, it becomes a little complicated if we are talking about delivering services from the UK to a registered business in Republic of Ireland (EU). If the services are being delivered under the general rule, and the business is not registered for VAT in Ireland, the place of supply becomes the UK and the UK VAT needs to be charged. However, if the Irish company is registered for VAT, and the supply is being made under the general rule, under the principles of reverse charge mechanism, the liability of VAT would fall on the Irish customer and no VAT is required to be charged by the UK based supplier.

Marked as spam
Posted by al-fn (Questions: 36, Answers: 44)
Answered on 6 June 2020 12:00 pm
0
Private answer

UK VAT may need to be charged on services performed in Ireland or to clients based in Ireland, depending on the type of service supplied. This is a complex area, and there are specific rules for the following services:

  • Services relating to land or property
  • Restaurant and catering services
  • Services involving physical performance and events (e.g. artistic, cultural, education and training, sporting, entertainment services, exhibitions, conferences, meetings)
  • Services of short-term hire of means of transport
  • Passenger transport
  • Freight transport
  • Intermediary services (generally agencies or brokers working for a commission)
  • Training services supplied to overseas governments
  • Internet and electronically supplied services

Everything else is covered by a general rule. This includes copyright, royalties, licences, other intellectual rights, advertising, consultants, engineers, lawyers, accountants, data processing, written translation, computer programming, software maintenance, web design, sound engineers and technicians, the supply of staff, banking and insurance. If the service under the general rule is being supplied to a business customer in Ireland, it will be within the scope of Irish VAT (UK VAT is not charged). The customer does not need to be registered for VAT for the service to qualify as being for business purposes, but some evidence of the business purpose should be obtained.

Marked as spam
Posted by al-fn (Questions: 36, Answers: 44)
Answered on 6 June 2020 12:00 pm
0
Private answer

VAT or Value-Added-Tax is a tax that is applied in all EU countries, and differs according to each country's rules and regulations . As a general rule as the professional services are being supplied to a business customer (ie company rather than an individual consumer) in Ireland, this is within the scope of Irish VAT (UK VAT is not charged). If the Irish-based company is VAT registered in Ireland, a reverse charge mechanism exists which shifts the obligation to account for this VAT to the customer. This means that the Irish customer has the responsibility for dealing with most of the VAT issues. If the UK-based company is providing services to an Irish company which isn’t VAT registered, then UK VAT is applicable and thus should be charged.

Marked as spam
Posted by al-fn (Questions: 36, Answers: 44)
Answered on 6 June 2020 11:59 am