Dáil Éireann Debate, Tuesday - 23 November 2010
134 Deputy Joan Burton asked the Minister for Finance if he will set out the value added tax status of fourth schedule goods; the revenue that could be raised on a 2011 and full year basis by imposing the lower VAT rate or the standard rate on them; and if he will make a statement on the matter. [43936/10]
Amharc ar fhreagraIt is assumed that the Deputy is referring to intra-Community supplies of services, known as Fourth Schedule Services under the old Fourth Schedule to the VAT Act 1972. The Fourth Schedule listed a number of services that were to be taxed in the Member State where they were received. The Fourth Schedule was discontinued from 1 January 2010 as part of the introduction of the EU wide changes to the Place of Supply rules for intra-community services, which provided that the majority of services, and not just those listed in the Fourth Schedule, are taxable where received. In general the supply of goods and services by a VAT-registered trader in one EU Member State to a VAT-registered trader in another EU Member State qualifies as an intra-Community supply. In the case of goods, a VAT-registered trader in another EU Member State may zero-rate the supply to a customer in the State if the customer is registered for VAT in the State. In the case of services, the place of taxation is the place where the recipient is established (generally registered for VAT) in the case of business-to-business supplies. In both cases, the customer registered for VAT in the State accounts for VAT on the acquired goods and received services at the appropriate Irish VAT rate. Where the VAT registered customer uses the goods and services for the purposes of his taxable supplies a simultaneous input credit may be taken thus cancelling the VAT liability.
With regard to the intra-Community supply of services to persons not registered for VAT the place of taxation is the State where the supplier is established. I would point out that the Place of Supply rules provide for some changes in the coming years but these are not relevant to the Deputy's question.
With regard to the revenue generated by altering the VAT rates applied to received services from suppliers established in other EU Member States, it should be noted that the majority of these services are already charged to VAT at the standard rate and as such it would negatively affect Exchequer yield were a reduced rate to be applied to them. In any case, where the received services are used by a VAT-registered person for business purposes the VAT is reclaimed and as such any VAT rate changes would have no Exchequer impact.
I would point out that the Place of Supply rules have EU-wide application and as a consequence it is not open to Ireland to unilaterally amend the rules.
