Revenue Information Note

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VAT and Education and Vocational Training and Retraining Services

1. General

This leaflet deals with the VAT treatment of Education and Vocational training or retraining services provided by institutions, organisations, or companies both in the state and private sectors. Such services, in general, qualify for exemption from VAT.

2. Law

The VAT exemption for Education and Vocational Training which is provided for in Article 132 (1)(i) of the 2006 VAT Directive, has been transposed into the Irish VAT law at Paragraph. 4 (3) of Schedule 1 Value Added Tax Act Consolidation Act 2010 as follows:

The provision by educational establishments recognised by the State of children’s or young people’s education, school or university education, or vocational training or retraining (including the supply of goods and services incidental to that provision, other than the supply of research services), and the provision by other persons of education, training or retraining of a similar kind, but excluding instruction in the driving of mechanically propelled road vehicles other than -

  1. Vehicles designed or constructed for the carriage of 1.5 tonnes of goods or more, or
  2. Vehicles designed or constructed for the carriage of more than 9 passengers (including the driver).

3. What is Education?

While the terms children’s or young persons education, school or university education, are not defined for VAT purposes they are taken as referring to the normal education programmes followed by pupils and students pursuing the academic and sporting curriculum’s prescribed at primary, second, and third level institutions in both the public and private sectors.

As a general rule, to qualify for the exemption an educational course must satisfy the following criteria:

  • It must be provided in a ‘classroom’ setting, or by way of a virtual classroom such as would provide for e-learning or distance learning.
  • If it consists of sporting activities it must be provided in an appropriate sporting facility.
  • It must be provided as a structured course, with a clear syllabus, either to an individual or a group.
  • It must confer a level of skill or ability which can be evaluated by comparison with objective standards.
  • A relationship must exist as between a student and a teacher or tutor.

The nature and scope of what is interpreted as education that qualifies for the exemption is extensive and wide-ranging. The provision of courses consisting of academic or sporting activities will generally qualify for exemption as education if the activities form part of the approved curriculum followed in educational establishments recognised by the State. Similar courses run by private institutions will also qualify for exemption.

3.1. Children’s Summer Schools

In general if the programme followed as part of a summer school or similar activity involves structured learning of an academic, artistic, or sporting nature where tuition is given by appropriately qualified personnel then the activities of the summer school qualify for exemption.

3.2. Private Tuition

The provision by personnel with appropriate skills of private tuition covering subjects which form part of the syllabuses of educational establishments recognised by the state qualifies for the exemption.

3.3 Adult Education

The provision of adult education courses on subjects or areas that form part of the curriculum in schools, universities or other institutions, qualifies for exemption. Revenue are prepared to accept that part time, extra mural, and similar type courses, usually undertaken in both the State (VEC) and private adult education sectors qualify for exemption.

3.4. Treatment of Supplies of Goods or Services Incidental to Education

As mentioned at Paragraph 2 above the supply of supply of goods and services (excluding research services) incidental to education or vocational training and retraining is exempt from VAT.

For example the supply of material to accompany an educational course, such as goods and services that would normally be subject to VAT if supplied separately, may be treated as ancillary to the supply of the educational service and exempt from VAT. Examples are books and written materials to accompany the course, or services such as photocopying and binding. The exemption will only apply where the goods or services are supplied, either by the college or a third party authorised to supply such materials, to students who are enrolled in a course of education.

Where goods or services are made available to a prospective student for purchase without further obligation such as enrolling in a course, or to any other persons, the supply is treated as liable to VAT at the appropriate rate.

It should be noted that goods and services are treated as incidental to education only where they are directly linked to the education service itself.

4. Exemption for Catering Services supplied to Students in a School

A specific exemption in Paragraph 5(1)(b) of Schedule 1, VAT Consolidation Act, 2010 provides for exemption to apply to catering services supplied to school students at their school. The exemption applies both where the caterer acts as a principal and supplies his services directly to the students and where the caterer acts as an agent and invoices the school for his services.

The exemption does not apply to catering services supplied to persons other than students e.g. staff, visitors etc.

5. Vocational Training or Retraining

Vocational training is not defined for VAT purposes so it is taken to encompass any training given to a person, who can either be an employee or self employed, in order to improve their ability to carry out their work, or to obtain further employment. It can be provided in a classroom setting in an institution or on an employer’s premises, on a one to one or group basis. The trainees must achieve a recognisable standard of skill that will assist them in carrying out their work or duties.

Educational institutions administered by the State or recognised by the State, or private institutions, all provide vocational training or retraining services.

The following guidelines can be used in determining whether a service constitutes vocational training or retraining that would qualify for VAT exemption.

  • It must be vocational in nature; that is, it must be directed towards an occupation and its associated skills.
  • It must be primarily given to improve the vocational skills rather than the personal skills of the trainee. (See Paragraph 6.)
  • The vocational skills that the trainee acquires can be transferable from one employment to another, or to self-employment.
  • The training should confer on the trainee a level of skill/ability that can be evaluated by comparison with objective standards.
  • The training should be provided by means of a structured course, which can be of any duration, and be provided in a classroom setting, to a group or a one to one basis, or by way of a virtual classroom such as would provide for e-learning or distance learning.
  • There should be a clear trainee/trainer relationship between the trainee and the trainer.

6. Vocational Training that is not treated as Exempt

Where training or retraining is provided that:

  • does not, in the main, fit within the guidelines set out above, or
  • is for the personal, e.g. life coaching, rather than vocational development of the trainee,

it cannot qualify for the exemption and is liable to VAT at the standard rate.

Schedule 1 Paragraph. 4(3) specifically provides that exemption is not applicable in the case of instruction given in relation to the driving of mechanically propelled road vehicles except in cases where the vehicles are either designed or constructed for the carriage of 1.5 tonnes of goods or more, or for the carriage of 9 persons or more (including the driver).

One to one coaching which involves vocational training will of course always be exempt.

7. Management Consultancy

The provision of management consultancy services, which seek to address deficiencies in the way organisations are managed and which concern the organisation itself rather than the individuals employed in it, does not qualify for the exemption.

8. Place of Supply of Education or Vocational Training Services

New rules covering the place of supply of services for VAT purposes came into effect on 1 January 2010. The place of supply of education and training services is covered by the normal VAT place of supply of services rules. In such cases the VAT treatment will depend on where the customer is established and whether he/she is a taxable or non-taxable person. Where services are supplied to a taxable person then the place of supply will be where that person is established and that person is also responsible for accounting for any VAT due on the service using the reverse charge mechanism. Where services are supplied to a non-taxable person then the place of supply is where the supplier is established.

All supplies of services that qualify as education and training services, where the supplier and the customer are based in Ireland, are exempt from VAT.

If an organisation based in Ireland sends staff to a training session supplied outside the state then the place of supply of that service would be where the organisation (a taxable person) is established i.e. Ireland. The supply would be subject to the VAT rules applicable here which means that the training service would be exempt.

If an organisation based outside the State sends staff to a training session in Ireland then the place of supply of that service would be where the organisation (a taxable person) is established and the supply would be subject to the VAT rules applicable there.

However see next Paragraph 9 on the Place of Supply of admissions to conferences and seminars where in certain circumstances delegates can be regarded as receiving education, training or retraining services.

Further information on the Place of Supply of Services is available in the Information Leaflet - New Intra Community VAT Rules on Place of Supply of Services (December 2009).

9. Place of Supply of Admissions to Cultural, Artistic, Sporting, Scientific, Educational, or Entertainment Events, and to Seminars and Conferences

Changes in relation to the place of supply of admissions to cultural, artistic, sporting, scientific, educational, or entertainment events came into effect on 1 January 2011.

From that date the place of supply of admission charges and services ancillary to the admission charges to educational and training events such as conferences and seminars, where the customer is a taxable person, will be where the event actually takes place and not where the taxable person is established. If the participants can be regarded as receiving educational services or vocational training services in the course of attending the conference then the admission fees including registration fees for the seminar or conference can be treated as exempt from VAT.

Further information is available in the Information Leaflet - Admissions to cultural, artistic, sporting, scientific, educational, entertainment or similar events - changes effective from 1 January 2011 - Addendum to VAT Information Leaflet - New Intra-Community VAT Rules on Place of Supply for Services. (December 2009).

10. Registration for VAT

Persons engaged in education or training activities that are exempt from VAT are not entitled to register for VAT in respect of those activities, apart from accounting for VAT on services received from suppliers based outside the state and on certain intra- community acquisitions of goods. They are not entitled to claim input credit in connection with activities that are exempt (See Paragraph 12 below).

Persons supplying taxable services must register for VAT if their turnover from the supply of taxable services exceeds an annual threshold of €37,500. They are not obliged to register for VAT if their turnover is below that threshold but may do so if they wish. Full details on registration requirements and procedures are contained in the VAT Guide.

11. Rates of VAT

Generally the rate of VAT applicable to education services that do not qualify for exemption is the standard rate. The VAT Rates database sets out details of rates applicable to Educational services, under the heading of Education, and to Training and Vocational Training under the heading Training.

12. Input Credit

Where a person carries on both taxable and exempt activities there may be an entitlement to claim partial input credit. In computing the amount of tax payable in respect of a taxable period an accountable person may deduct the VAT charged on most goods and services which are used for the purposes of his or her taxable supplies. No deduction may be made for the VAT on goods and services used for any other purposes and in particular for education services that are exempt from VAT. In the case of dual use inputs, where goods and services are not used solely for the purposes of either deductible supplies or activities or non-deductible supplies or activities, then the VAT involved must be apportioned between the deductible activities and the non- deductible activities. The apportionment method used must reflect the extent to which the dual use inputs are used for the purposes of the persons deductible supplies or activities and have due regard to the range of that persons total supplies and activities. Please see www.revenue.ie for further information.

13. Records

A VAT registered person must keep records of all business transactions, which affect or may affect his or her liability to VAT and entitlement to deductibility. The records must be kept up to date and must be sufficiently detailed to enable a person to accurately calculate liability or repayment and also to enable Revenue to establish the veracity of the underlying transactions, if necessary.

14. Further Information

Further information on the subject matter of this Leaflet can be got from the local Revenue District dealing with a persons tax affairs. Details of addresses for the offices are on the Contact Page.

This Leaflet is issued by:
VAT Interpretation Branch,
Indirect Taxes Division
Stamping Building,
Dublin Castle

July 2012