Dáil Éireann Debate, Tuesday - 21 October 2014
230. Deputy Michael McGrath asked the Minister for Finance the basis of the calculation that the cross-border EU telecommunications broadcasting and electronically supplied services VAT change will yield €100 million to the Exchequer in 2015; and if he will make a statement on the matter. [40118/14]
Amharc ar fhreagraAs you will be aware, from 1 January 2015 cross-border EU telecommunications, broadcasting and electronically supplied services to private consumers will be charged to VAT in the Member State of the consumer, and not in the Member State of the supplier as is the case currently. This VAT change means that Member States will lose VAT revenue in respect of existing outward sales to consumers in other Member States but will gain revenue in respect of inward sales to their own consumers of these services. The new rules will level the playing field in Europe by removing the incentive for companies to locate in low VAT rate jurisdictions, which should enhance Ireland's attractiveness for e-services companies.
The services affected by these changes include mobile and fixed-line telephone services; radio and television broadcasting services and electronically supplied services such as apps, music, online games, e-books, digital newspapers and web hosting services.
The place of supply changes include transitional measures, which provide that Member States can retain 30% of the VAT revenues on outward supplies of electronic services in 2015 and 2016; 15% of revenues in 2017 and 2018, after which the full VAT revenue will accrue to the consumer's Member State.
The Budget announced an estimated yield to the Irish Exchequer in 2015 of €100 million from the place of supply changes. The reason Ireland is set to gain from the VAT changes is because we are a net recipient of electronic and broadcasting services from other Member States. Figures were sourced by my officials and by the Revenue Commissioners on the quantity of telecommunications, broadcasting and electronically supplied services made to customers in Ireland from other Member States, and such services supplied from Ireland to customers in other EU countries. In terms of inward supplies, the estimate is mainly driven by 1) UK-based television services and 2) Luxembourg-based electronically supplied services. In addition, Ireland has a small level of VAT outflows relating to these services, in areas such as gaming, apps and virus protection software, supplied from Ireland to the EU. The €100 million estimated gain in 2015 is a result of extrapolating the VAT from the estimated level of supplies as outlined above, and taking into account the transitional measures.
