eServices & Broadcasting

Introduction

This document explains the different measures regarding the value-added-tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services, to ensure that where these services are consumed in the EU then they should be taxed in the EU, and not taxed if they are consumed outside the EU.

Electronically supplied services (eServices)
Place of supply rules for eServices
Special scheme for eServices
Broadcasting Services

Please note that broadcasting services do not come within the scope of the definition of electronically supplied services (eServices).

These measures deal with the place of supply rules for these services, and include an optional special scheme for non-EU suppliers supplying digital products into the EU.

1. Electronically Supplied Services (eServices)

What are electronically supplied services?

1.1 An 'electronically supplied service' is one that is delivered over the Internet (or an electronic network which is reliant on the Internet or similar network for its provision) and is heavily dependent on information technology for its supply - i.e. the service is essentially automated, involving minimal human intervention and in the absence of information technology does not have viability. An indicative list of such services is, as follows:

Digitised products (such as software and changes to or upgrades of software);
Services which provide or support a business or personal presence on an electronic network (for example, a website);
Services automatically generated from computer, via the Internet or an electronic network, in response to specific data input by the customer;
Other services which are automated and dependent on the Internet or an electronic network for their provision.

In general, the use of the Internet or other electronic networks by parties to communicate with respect to transactions or to facilitate trading does not, any more than the use of a phone or fax, affect the normal VAT rules that apply. For example, where parties simply use the Internet to convey information in the course of a business transaction (e.g. email), this does not change the nature of that transaction. This differs from a supply that is completely dependent on the Internet in order to be carried out (e.g. searching and retrieving information from a database with no human intervention).

Detailed examples of electronically supplied services

1.2 Tables giving examples of transactions that are either included or excluded from the definition of 'electronically supplied services', are reproduced in Appendices 1 & 2.

1.3 Supplies that are regarded as being electronically supplied (appendix 1) are treated in accordance with the rules laid down in EU Directive 2002/38/EC which was transposed into national law with effect from 1 July 2003. Supplies that are regarded as not being electronically supplied (appendix 2) are treated in accordance with other place of supply rules.

1.4 Particular care should be taken where a service includes both electronic and other elements. Such composite or multiple transactions must generally be considered on a case-by-case basis. Where any doubt remains reference should be made to the local Revenue District.

The VAT rate

1.5 Electronically supplied services are taxable at the standard rate in each EU Member State, unless an exemption applies in a EU Member State. For example, if the 'traditional' forms of supply of gambling is exempt in a EU Member State, it would also be exempt in that EU Member State if it is supplied as an electronically supplied service.

2. Place of Supply Rules For Electronic Services

Business-to-Business (B2B)

2.1 The new Business-to-Business (B2B) place of supply rules apply to all such supplies where the recipient is established in a EU Member State for electronically supplied services.

The rules provide that the place of supply is the place where the customer has established his or her business. The reverse charge rule applies, under which the customer must account for the VAT.

Business-to-Consumer (B2C)

2.2 The Business-to-Consumer (B2C) place of supply rules for electronically supplied services provides that, where a non-EU business supplies to a private consumer in any EU Member State, the place of supply is the place where the consumer normally resides. For example, if a Canadian business supplies electronic services to an Irish consumer the place of supply (and of taxation) is Ireland.

2.3 Suppliers of these services are liable to register and account for VAT in every EU Member State where they have private customers.However, an optional special scheme is available whereby non-EU businesses can register in one EU Member State only - this is covered in section 4.

2.4 The B2C place of supply rule for electronically supplied services supplied by an EU business to a private consumer in the EU, is still the EU Member State in which the supplier is established.

B2B: Verification of business status

2.5 How can a supplier verify their customer's business status?

For B2B supplies within the EU the evidence required at the time of the transaction would normally be the customer's VAT registration number and country identification code prefix. The number must conform to the format for the registration person's EU Member State (VAT numbers can be checked online in the VIES database.)

It is possible to verify Irish VAT registration numbers with the VIMA Office that can be contacted at vimahelp@revenue.ie. Other EU Member States may have similar systemsto check the validity of VAT registration numbers.

Under normal trading practices businesses will often know their business customers and, in such cases, they will not therefore need to routinely check all VAT numbers quoted, provided that the numbers conform to the correct country format.

If you are unable to confirm that the customer is in business or if there remains any doubt about the use of a VAT registration number, VAT should be charged as appropriate on all supplies to that customer including supplies that have already been made.

The position in relation to various supplies is summarised in the table below.

Table 2.1 - place of supply rules for electronic services
Supplied from	Supplied to	Place of Supply
Business in Ireland	Business in Ireland	Ireland
Business in Ireland	Business in other EU State	Other EU State
Business in Ireland	Business outside EU	Outside EU (no VAT)
Business in Ireland	Private consumer in Ireland	Ireland
Business in Ireland	Private consumer in other EU State	Ireland
Business in Ireland	Private consumer outside EU	Outside EU (no VAT)
Business in other EU State	Business in Ireland	Ireland
Business in other EU State	Private consumer in Ireland	Other EU State
Business outside EU	Business in Ireland	Ireland
Business outside EU	Private consumer in Ireland	Ireland

3. Special Scheme for Electronic Services

A special scheme, introduced to reduce the compliance burden and administrative costs for accountable persons, is in operation.

Broad outline of the special scheme

3.1 The special scheme enables the non-EU supplier to choose a EU Member State in which to register for and pay VAT, regardless of the EU Member State in which the suppliers private consumer resides. Once registered the supplier makes VAT returns to that EU Member State, declaring the VAT due on all the on-line sales to consumers within the EU. The rate of VAT is the standard rate in the country in which the consumer resides. A special on-line return form is provided under which the supplier must provide a breakdown of all electronic supplies to customers in each EU Member State. Payment is made to a designated account in the EU Member State of registration. That EU Member State re-distributes the VAT receipts to other Member States in accordance with the amounts due as declared by the supplier.

3.2 For example, an Australian business supplies on-line digital products to private B2C in Ireland, France and Germany. It opts to register for the special scheme in Ireland. It charges Irish VAT to its Irish customers, French VAT to its French customers and German VAT to its German customers. It registers electronically in Ireland, puts all the details on a single quarterly electronic return and pays all the VAT due to the Irish Revenue each quarter. The Irish Revenue retains the Irish VAT and distributes the French and German VAT to those countries.

What businesses are eligible to use the special scheme?

3.3 A business is eligible to use the special scheme if that business:

supplies electronically supplied services to private consumers who reside in the EU,
is not established within the EU, and
is not otherwise registered (or required to be registered) for VAT in any EU Member State.

How does the scheme operate in Ireland?

3.4 The Revenue Commissioners have set up a register of non-EU suppliers who opt to register in this country under the scheme. Registration is only be accessible through the Revenue Online System (ROS). Suppliers must supply certain details (specified below) to ROS in order to register under the scheme. A section on ROS, especially for non-EU customers, facilitates applicants in the registration process.

3.5 A supplier registered under the scheme is allocated an identification number (the special VAT number for electronic services supplies) and a digital certificate by ROS. Suppliers on the Irish register use their digital certificates to access the system via ROS. Suppliers must submit special VAT returns and pay Revenue the VAT due in respect of their supplies in all EU Member States including Ireland within 20 days of the end of each calendar quarter. Payment must be made in € to a bank account designated by the Revenue Commissioners.

Registration - information needed and procedures

3.6 The non-EU supplier must furnish the following information to Revenue in order to register under the scheme:

Name and postal address
Electronic addresses including website addresses
National tax number, if any
A statement that the supplier is not registered for VAT within the EU
The date from which the supply of electronically supplied services to EU consumers commences.

3.7 The information must be supplied electronically, on the registration form available on ROS. When registration is confirmed, Revenue will email the applicant his or her special VAT number, together with details on how the digital certificate is to be retrieved.

3.8 Must a business be making supplies before registering?

Not necessarily. On registration, the supplier must state the date from which the supply of electronically supplied services to EU consumers commences. For example, a supplier could register in August on the basis that the supplies would start from 1 September. Note however that nil returns must be submitted if there are no supplies in a calendar quarter.

3.9 Must a business make supplies in Ireland in order to register here?

No. Businesses who only make, or intend making, supplies under the special scheme to customers in other EU Member States may register for the special scheme in Ireland if they so wish. The VAT due in those other EU Member States will be paid to the Revenue Commissioners, who will distribute it to the relevant tax authorities.

The procedure for submitting VAT returns and making payments

3.10 The special VAT returns are due for each calendar quarter (30 September, 31 December, 31 March and 30 June) and must be submitted by the 20th of the month at the end of the quarter to which the return relates. For example, the return for the calendar quarter ending on 30 September 2007 must be submitted by 20 October 2007. The VAT due in respect of supplies in all EU Member States must be paid at the same time as the return, into a bank account designated by the Revenue Commissioners. Nil returns must also be submitted.

3.11 The special VAT return must show the following information:

The non-EU supplier's identification number.
For each EU Member State where VAT is due, the total value (excluding VAT), the applicable VAT rate and the amount of VAT due at each applicable rate in respect of electronically supplied services for the quarter.
The total VAT payable in all EU Member States.

3.12 The special VAT returns must be filed electronically on ROS for the special scheme, using the digital certificates for access. Suppliers should give both their VAT number and details on the relevant quarterly period to the bank when making payments. Receipts for moneys received will be issued to the supplier via the ROS system.

VAT on purchases

3.12 A person from outside the EU who makes supplies in Ireland under the scheme is not entitled to deduct input VAT using the VAT return. However, the supplier is entitled to claim a refund under the terms of the 13th Directive in respect of VAT paid on goods or services used for the purposes of taxable activities falling under the special scheme. Claims in respect of the VAT paid in Ireland should be made to the Revenue Commissioners under the standard 13th Directive procedures. For further information contact unregvat@revenue.ie

Records

3.13 Suppliers registered for the special scheme must keep records of all transactions affecting their VAT liability - for example, the value and date of the transaction, the customer's name and location, etc. These records must be kept for 10 years and must be made available electronically, on request, to the tax authorities in the EU Member State where the supplier is registered for the special scheme and to each EU Member State where the supplier's customers reside.

Changes in details supplied or business circumstances

3.14 Suppliers under the scheme are required to notify Revenue if there are any changes in the details provided under paragraph 3.6 above (name and address, websites, etc.) or if their taxable activity changes to the extent that they are no longer eligible to use the special scheme. For example, if the supplier begins to supply goods or services in the EU, he/she will be liable to register for VAT under the normal rules and will cease to be eligible for the scheme.

3.15 Revenue may exclude from the scheme suppliers who fail to comply with the provisions of the scheme.

Suppliers not registered for the special scheme in Ireland

3.16 Non-EU businesses who supply electronic services to consumers in Ireland and are registered for the special scheme in another EU Member State must pay the Irish VAT due to the tax authorities in that other EU Member State, under the terms of their Special Scheme. Such businesses must also keep records of the Irish (and other) transactions.

3.17 Non-EU businesses who supply electronic services to consumers in Ireland and are not registered for the special scheme in any EU Member State must register in Ireland and account for the Irish VAT in respect of those supplies, under the normal VAT rules. These businesses must also register and account for VAT in each and every other EU Member State where supplies are made.

4. Radio and Television Broadcasting Services

The place of supply rules

4.1 The place of supply rules provide that these services are taxed in the EU Member State of consumption. In particular,

Where businesses supply radio and television broadcasting services to businesses in the EU, the place of supply is where the customer has established his or her business. The reverse charge rule applies, under which the business customer will account for the VAT. This is similar to the B2B rule for electronic services - see paragraph 2.1
Where non-EU businesses supply radio and television broadcasting services to private consumers in Ireland, the place of taxation is Ireland and the supplier must register and account for the VAT here. This is similar to the B2C rule for electronic services - see paragraph 2.2. However, there is no optional special scheme for non-EU suppliers of radio and TV broadcasting services.

Some examples

4.2 Accountable persons - for example VAT registered pubs and clubs - who buy in broadcasting services from suppliers established in other EU Member States or outside the EU (by means of a satellite dish and decoder), are taxed in Ireland under the reverse charge procedure. This is a change to the current rule, which says the place of taxation is where the supplier is established.

4.3 Private individuals in Ireland who pay for broadcasting services supplied by non-EU suppliers (e.g. ‘pay per view') are taxable in Ireland under the new rules. The non-EU supplier is obliged to register and account for VAT in Ireland in respect of all his or her supplies to private individuals in the State.

Appendix 1

Examples of services regarded as being electronically supplied

Example 1: Web site supply, web-hosting and distance maintenance of programmes and equipment

Website hosting and webpage hosting
Automated, online distance maintenance of programmes
Remote systems administration
Online data warehousing (i.e. where specific data is stored and retrieved electronically)
Online supply of on-demand disc space

Example 2: Software and updating thereof

Accessing or downloading software (e.g. procurement/accountancy programmes, anti-virus software) plus updates.
Bannerblockers (software to block banner adverts showing).
Download drivers, such as software that interfaces PC with peripheral equipment (e.g. printers).
Online automated installation of filters on websites.
Online automated installation of firewalls.

Example 3: Images

Accessing or downloading desktop themes
Accessing or downloading photographic or pictorial images or screensavers

Example 4: Text and information

The digitised content of books and other electronic publications
Subscription to online newspaper and journals
Weblogs and website statistics
Online news, traffic information and weather reports
Online information generated automatically by software from specific data input by the customer, such as legal and financial data (e.g. continually updated stock market data)
The provision of advertising space (e.g. banner ads on a website/webpage)

Example 5: Making databases available

Use of search engines and Internet directories.

Example 6: Music

Accessing or downloading of music onto PCs, mobile phones, etc.
Accessing or downloading of jingles, excerpts, ringtones, or other sounds.

Example 7: Films

Accessing or downloading of films.

Example 8: Broadcasts and events - political, cultural, artistic, sporting, scientific and entertainment

Web-based broadcasting that is only provided over the internet or similar electronic network and is not simultaneously broadcast over a traditional radio or television network (as opposed to example 4, appendix 2).

Example 9: Games, including games of chance and gambling games

Downloads of games onto PCs, mobile phones, etc.
Accessing automated on-line games which are dependent on the internet, or other similar electronic networks, where players are remote from one another.

Example 10: Distance teaching

Teaching that is automated and dependent on the Internet or similar electronic network to function, including virtual classrooms (as opposed to example 2, appendix 2).
Workbooks completed by pupil on-line and marked automatically, without human intervention

Example 11: items not explicitly listed in examples 1-5

Online auction services (to the extent that they are not already considered to be web-hosting services under example 1) that are dependent on automated databases and data input by the customer requiring little or no human intervention (e.g. online marketplace or online shopping portal) (as opposed to example 3, appendix 2).
Internet Service Packages (ISPs) in which the telecommunications component is an ancillary and subordinate part (i.e. a package that goes beyond mere Internet access, comprising various elements (e.g. content pages containing news, weather, travel information; games fora; web-hosting; access to chat-lines etc.))

Appendix 2

Examples of services not regarded as being electronically supplied

Example 1

A supply of

A good, where the order and processing is done electronically
A CDROM, floppy disc or similar tangible media
Printed matter such as a book, newsletter, newspaper or journal
A CD or audio cassette
A video cassette or DVD
A game on CDROM or DVD

Rationale: these are supplies of goods.

Example 2

A supply of

services of lawyers and financial consultants, etc. who advise clients through email
interactive teaching services where the course content is delivered by a teacher over the Internet or an electronic network (i.e. via remote link)

Rationale: this is a supply of service that relies on substantial human intervention and the internet or electronic network is only used as a means of communication.

Example 3

A supply of

Physical repair services of computer equipment
Off-line data warehousing services
Advertising services, such as in newspapers, on posters and on television
Telephone helpdesk services
Teaching services involving correspondence courses such as postal courses
Conventional auctioneers' services reliant on direct human intervention, irrespective of how bids are made (e.g. in person, via internet or telephone) (as opposed to example 11, appendix 1).

Rationale: these are supplies of services that are not delivered over the Internet and rely on substantial human intervention.

Example 4

A supply of a radio and television broadcasting service provided over the Internet or similar electronic network, simultaneous to the same broadcast being provided over traditional radio or television network (as opposed to example 8, appendix 1).

Rationale: this is a supply of a radio and television broadcasting service, which is covered by the penultimate indent of Article 9(2)(e).

Example 5

A supply of

Videophone services (i.e. telephone services with a video component)
Access to the internet and World Wide Web
Telephony (i.e. telephone service provided through the internet)

Rationale: these are supplies of telecommunication services and are covered by the place of supply rules for such services under the ninth indent of Article 9(2)(e).

Further Information

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).

This leaflet is issued by

VAT Appeals and Communications Branch,
Indirect Taxes Division,
Dublin Castle.

October 2008

This information leaflet which sets out the current practice at the date of its issue is intended for guidance only and does not purport to be a definitive legal interpretation of the provisions of the Value-Added Tax Act 1972 (as amended).

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