This article looks at VAT rules for the Business to Consumer provision of services of a professional, technical, financial, intellectual or other intangible nature.
Introduction
Generally, where services are provided on a Business to Consumer (B2C) basis, VAT will be payable in the place where the supplier is located. Where services are provided cross-border on a Business to Business (B2B) basis then the general B2B rules will apply, i.e., the place of supply (place where VAT is due) will be the place where the customer belongs.
There are a number of exceptions to these general rules and one such exception relates to the provision of B2C services of a professional, technical, financial, intellectual or other intangible nature.
The new rules impact both providers of these services in Ireland and providers of these services in Northern Ireland.
What services are included?
Some of the key services which fall within the scope of these rules are listed below. The services are those that have an advisory nature with a high degree of intellectual character:
- Advertising services.
- Services of consultants, engineers, lawyers, accountants, and other similar services (note that where services provided by these professions directly relate to land then these will be considered a “land related supply” and a different set of VAT rules will apply. Further VAT guidance should be sought if this is the case).
- Banking, financial and insurance services.
- Supply of staff.
- Letting on hire of goods other than means of transport.
- Transfers and assignments of copyright, patents, licences, trademarks and similar rights.
What are the VAT treatment rules?
Suppliers in Ireland: Where your business belongs in Ireland and supplies services of this nature on a B2C basis to customers who belong outside the EU, the place of supply (i.e., the place where VAT is due) will be outside the EU. In general, no Irish VAT will be chargeable on these supplies.
For example, an accountant located in Ireland supplying services to a private customer in Northern Ireland would not charge Irish VAT, as the place of supply is outside the EU.
Suppliers in Northern Ireland and UK: Where your business belongs in Northern Ireland and supplies services of this nature on a B2C basis to customers who belong outside the UK, then for VAT purposes the services will be deemed to be supplied where the customer belongs. The services will be outside the scope of UK VAT.
For example, an accountant located in Northern Ireland supplying services to a private customer in Ireland, would not charge Irish VAT as the place of supply is outside the NI and UK.
Important Note: At present, where these services are provided from a NI supplier to a supplier in Ireland (B2B) then the supplies fall outside the scope of Irish/EU VAT. Similarly, where supplies of this nature are provided from an Irish supplier to an NI based customer (B2C) then the supplies fall outside the scope of UK VAT.
Further information
GOV.UK Place of supply of services (VAT Notice 741A): B2C services of a professional, technical, financial, intellectual or other intangible nature supplied to customers outside the UK.
Revenue.ie: Supplies of services to non-business customers outside the EU (B2C)
Article reviewed: April 2023