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VAT Exemptions

Dáil Éireann Debate, Tuesday - 2 December 2014

Tuesday, 2 December 2014

Questions (178)

Michael McGrath

Question:

178. Deputy Michael McGrath asked the Minister for Finance his views on following the example of the UK in exempting charity music sales, including the recent Band Aid 30 single, from VAT; and if he will make a statement on the matter. [45886/14]

View answer

Oral answers (1 contributions)

I would first of all say that I have not received any requests or proposal in relation to the VAT treatment of the Band Aid charity single.

In Ireland charities are exempt from VAT, which means they do not have to charge VAT on the goods or services they supply, such as CDs, but in addition they cannot claim back the VAT charged on the costs associated with their charitable business. In this case, where a charity produces a CD and supplies it themselves, it will be exempt from VAT in Ireland. However, where a charity makes an arrangement with a CD distributor to supply the charity CD on their behalf, then the CD sales are liable to VAT at the 23% VAT rate.

The situation is different again in the case of electronically supplied music. Under the current rules which apply until 31 December 2014, supplies of music, including charity singles, within the EU are charged to VAT in the Member State of the supplier. In this case, if the Band Aid single is being supplied from the UK, UK VAT rules will apply to that sale. Supplies of electronically supplied music into Europe, for the most part, are made from Luxembourg, where the VAT charged on these sales is at the standard VAT rate applying in Luxembourg. From 1 January 2015 the place of supply for electronically supplied music, including charity singles, will be the place of the consumer, and as such sales of electronically supplied music to Irish consumers will be liable to Irish VAT. In all cases, the standard VAT rate is the VAT rate charged on CD and electronically supplied music.

The VAT treatment of goods and services is guided by the EU VAT Directive, with which Irish VAT law must comply. Other than where supplied by a person who is exempt from VAT, such as a charity, the VAT Directive does not make provision for exempting from VAT the supply of CDs or electronically supplied music, whether the supply is for charitable purposes or not.

With regard to the UK Government's press release agreeing "to waive VAT on sales of the Band Aid anniversary single", from a technical perspective, and given EU VAT constraints, it is not clear what specific arrangements are being proposed by the UK, nor what arrangements are in place between the Band Aid charity and the distributor of the charity single in this regard.

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