Dáil Éireann debate -
Tuesday, 25 Jun 2002

Vol. 553 No. 5

Written Answers. - Arts Festivals.

Jim O'Keeffe

Question:

117 Mr. J. O'Keeffe asked the Minister for Finance if his attention has been drawn to the fact that as a result of section 101 of the Finance Act, 2002, arts festivals are now liable for VAT on fees paid to overseas artists; and if he will extend the current temporary derogation for Arts Council funded organisations indefinitely. [14445/02]

Minister for Finance (Mr. McCreevy)

I am aware that under section 101 of the Finance Act, 2002, changes were made to the VAT responsibilities of arts festivals. This section provides for the introduction of a reverse charge provision to cover cultural, artistic and entertainment services provided by performers not established in the State. The effect of this change is that the supplier of the service – i.e. the non-resident artist – is not liable for VAT on his or her supply of this service and the recipient will instead be liable. In most cases, this is the promoter of the event.

This section also provides for situations where the promoter and the performer are not established in the State, but where they operate from a premises within the State. In the case of all mobile traders, performers or otherwise, the owner of the premises must provide some details about the trader to the Revenue Commissioners. If such information is not forthcoming, the owner of the premises may be made joint and severally liable for the VAT.

Section 101 also provides for a temporary deferral of the reverse charge provision for all bodies who have received Arts Council funding over the past three years since the passing of the Act into law. Such bodies which are eligible are required to apply to the Revenue Commissioners to have the enforcement of the reverse charge process deferred until 1 March 2003. The purpose of this amendment was to allow those who organised more commercial entertainment and bodies funded by the Arts Council the option of using the reverse charge arrangements, if they so choose. It was also intended to allow many bodies such as arts festivals time to organise their affairs so as to comply with VAT legislation. This derogation does not imply any deferral of VAT which should be remitted to the Exchequer by non-resident traders and performers and it will be necessary for all arts organisations to comply with the relevant VAT requirements after 1 March 2003.

It has been the position since 1992 that all non-resident performers and in addition, all forms of mobile trader, have a liability to VAT when providing services in the State. This is in order to ensure that non-resident suppliers of goods and services do not evade tax, nor enjoy a competitive advantage over local traders. The changes in this year's Finance Act provide for a more effective collection mechanism for VAT incurred by non-resident performers and mobile traders. It was deemed necessary to introduce this provision in order to ensure that overseas artists do not evade their legitimate VAT liabilities.