The supply of advertising services in the State is a taxable activity liable to VAT at the standard rate. Persons who supply advertising services in the course or furtherance of business and whose annual turnover in a 12 month period exceeds, or is likely to exceed the specified limit €37,500, are obliged to register and account for VAT.
The scope of the term 'advertising services' has not been defined in VAT law. However, as a matter of practice, advertising services include all services actually carried out by advertising agencies which have the aim of promoting a product, a business or a person, for example, media publicity, promotional launches and other publicity events.
Place of Supply
Place of Supply rule up to 31 December 2009
Up to 31 December 2009 as a general rule the place of supply of services was the place where the person supplying the services has established an advertising services business. However, as an exception to this general rule and in common with other services listed in the Fourth Schedule to the VAT Act, the place of supply of advertising services was determined by the status and location of the recipient of the services.
Advertising services supplied by an advertising agent established in Ireland to any person in Ireland or to any non-business person within the EU were deemed to be supplied in Ireland and were liable to Irish VAT. Services supplied by Irish suppliers to business persons (whether they are registered for VAT or not) outside Ireland were deemed to be supplied at the place where the customer has a business establishment. Similarly, services received in Ireland by Irish business persons (whether they are registered for VAT or not) from overseas suppliers were deemed to be supplied in Ireland and were liable to Irish VAT.
Place of Supply rule from 1 January 2010
S.I. No. 520 of 2009 (PDF, 265KB) amending the VAT Act 1972 gave effect to significant new EU VAT legislation on the place of supply of services which came into operation on 1 January 2010.
In the case of advertising services the new rules are broadly similar to those, set out above, that operated for periods up to 31 December 2009. Supplies of advertsing services made in Ireland and received by taxable persons in other Member States of the EU are taxable where those persons have established their business. Similarly services received in Ireland by taxable persons are taxable here.
Where supplies are made to a taxable person within the EU there is now a requirement for the supplier in Ireland to report the details by completing a return for the VIES (VAT Information Exchange System). Where supplies are made to taxable persons established outside the EU no Irish VAT liability arises.
The new rules are explained in detail in the Information Leafet Place of Supply of Services.
The amount chargeable to VAT is the total consideration paid by the client in respect of the total service supplied.
Credit or deduction for VAT charged on expenditure incurred in providing advertising services is allowable except for expenditure relating to the following:
- the provision of food, drink, accommodation or other personal services for the accountable person, his agents or employees (for example, hotel costs);
- entertainment expenses;
- purchase or hire of cars or other road passenger vehicles;
- purchase of petrol;
- expenditure relating to exempt or non-business activities.
Where an advertising agency incurs VAT on food, drink, accommodation or other entertainment services, where such expenditure forms part of an advertising service in respect of which VAT is due and payable by the accountable person, the advertising agency may not claim credit in respect of the VAT incurred. VAT charged by the advertising agency to the client in respect to the advertising service itself is deductible, subject to the normal rules.
Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer's affairs. Contact details for all Revenue Districts can be found on the Contact Details Page.
VAT Interpretation Branch,
Indirect Taxes Division,