Simple Guides

Who is responsible for VAT?

The rules relating to VAT on services are different (and more complex) than those relating to goods.

From 1 January 2010 there is a general place of supply rule depending on whether the customer is a business or a consumer. If you are a UK business and acquire services from an Irish VAT registered company, then the place of supply will be where you the customer is based i.e. Northern Ireland. As such, you will be required to account for VAT under the reverse charge mechanism and provided the services are used for business purposes you can also reclaim the VAT you charge yourself. If you are a UK non-VAT registered business and acquire services from Ireland, then you will not be liable to account for UK VAT (subject to the registration thresholds). If you are not a UK business and acquire services from an Irish VAT registered company, then the place of supply will be where the supplier is based i.e. Ireland. The Irish company will charge Irish VAT. There are some exceptions to this general rule.

The main exceptions relate to:

  • Land / Property related services.
  • Passenger transport.
  • Cultural / educational events.
  • Hire of means of transport.
  • Service involving physical performance.
  • Restaurant and catering services.

As the rules regarding the supply of services are highly complex you should see professional advice relating to your specific circumstances.

If you are not a UK business and acquire services from an Irish VAT registered company, then the place of supply will be where the supplier is based i.e. Ireland. The Irish company will charge Irish VAT unless they are registered for VAT in the UK.

Additional rules have been introduced from 1 January 2015 for suppliers of digital services to non-VAT registered customers in other EC countries. Some examples of digital services include:

  • Online advertising
  • Distance maintenance of programmes or equipment
  • Sale of images or text, such as photos, eBooks, films and games

The above rules apply to services provided within the EU Single Market and therefore this may change when the UK leave the EU on 29 March 2019.