Dáil Éireann Debate, Thursday - 20 November 2014
13. Deputy Charlie McConalogue asked the Minister for Finance when a final response will issue regarding correspondence (details supplied) sent to his Department; and if he will make a statement on the matter. [44570/14]
View answerA response to your correspondence, in relation to the VAT treatment of the installation of fixtures and fittings and cross-border concerns, was issued on 20 November 2014.
In the first instance it is worth pointing out there is no competitive disadvantage between UK and Irish VAT registered business in terms of supplying to a UK business. Depending on the supply being offered, different variations of VAT treatment may apply, but in all cases, suppliers established in Ireland compete on a level playing field in the UK market with UK established suppliers.
The EU VAT Directive, with which Irish and UK VAT legislation must comply, distinguishes between a supply of goods and a supply of services. Where an Irish VAT registered trader makes a supply of goods to a UK business, the Irish trader zero-rates the supply and the UK business self-accounts for VAT on the goods. If the UK trader purchases the goods from a UK business, VAT would apply on the supply as normal. In both cases the UK trader will have the right to deduct the VAT charged on the goods if they are used for their taxable supplies. In this case the VAT treatment of the supply of goods is the same whether the supply is made from an Irish or a UK based supplier.
With regard to the supply of a service of the installation of fittings to a UK business, the same VAT treatment applies. Where supplied by an Irish company, the service is zero-rated, and the UK business self-accounts for VAT. Where supplied by a UK company VAT is charged on the supply as normal. In both cases the UK trader will have the right to deduct the VAT charged on the service of the installation of fittings if they are used for their taxable supplies. Again, there is no difference in the entitlement to deduct input VAT by the UK company who receives the services, whether the supplier is based in Ireland or the UK.
The VAT situation differs where the service being supplied relates to the installation of fixtures, but in any event, there is no discrimination in terms of VAT deductibility depending on the location of the supplier. Where a service consists of the installation of fixtures, the place of supply for VAT purposes will be the country where the installation takes place. In the case referred to in your correspondence, the installation of fixtures will take place in Ireland which means the service is liable to VAT in Ireland. In this situation the service should be charged with Irish VAT by both the Irish supplier and by the UK supplier, who will have to register for VAT in Ireland if not already registered. The UK recipient of the service will be charged to Irish VAT regardless of where the supplier of the service is based. Where they are entitled to input VAT deductibility on the service received, the UK business can make a claim to the UK revenue authorities for a refund of the Irish VAT charged on the service. While the VAT treatment is different in the case of the service of the installation of fixtures, than in the case of the service of the installation of fittings, and the supply of goods in general, it is still the case that UK and Irish suppliers of these services and goods operate on a level playing field in terms of VAT.
