16. Reverse charge for certain supplies

Summary

This section provides for various situations where reverse charge provisions apply. Under the reverse charge mechanism, the obligation to pay VAT is shifted from the person making the supply to the person to whom the supply is made. The customer is made accountable for, and liable to pay, the tax due in respect of the supply. While the reverse charge mechanism generally operates in relation to services supplied from abroad to taxable persons in the State, this section also applies the mechanism to domestic supplies in the case of NAMA property, greenhouse gas allowances, certain construction services, scrap metal, wholesale supplies of gas or electricity and gas or electricity certificates. In these cases, the recipient of the supply is the accountable person and liable to pay the tax under the reverse charge, as follows:

• Where ownership of goods is transferred by way of a vesting order to the National Assets Management Agency (NAMA), NAMA is made accountable and liable.
• Where greenhouse gas emission allowances are supplied by one business to another business in the State, the recipient in the State is made accountable and liable.
• Where construction services are supplied by a sub-contactor to a principal contractor, the principal contractor is made accountable and liable.
• Where construction services are supplied by an accountable person to a connected person who is a taxable person, the connected person is made accountable and liable.
• Where scrap metal is supplied by taxable persons carrying on a business in the State, the recipient in the State is made accountable and liable.
• Where gas or electricity is supplied by a taxable person in the State, to a taxable dealer carrying on a business in the State, the taxable dealer is made accountable and liable.
• Where a gas or electricity certificate is supplied by a taxable person carrying on a business in the State, to another taxable person carrying on a business in the State, the recipient of the gas or electricity certificate is made accountable and liable.

Details

(1) Subsection (1) provides for a reverse charge mechanism to apply when a supply of goods, which has arisen by virtue of a Vesting Order been made under the National Assets Management Agency Act 2009, occurs. The subsection provides that the National Assets Management Agency (NAMA) and any NAMA entity is the person liable to account for the VAT on that supply on the reverse charge basis. A NAMA entity is a person or body of persons, which is connected to NAMA within the meaning of section 97.

(2) Subsection (2) provides for a reverse charge mechanism to apply, with effect from 8 April 2010, where a taxable person who carries on a business in the State receives greenhouse gas emission allowances from another taxable person who carries on a business in the State. The recipient is the accountable person liable to pay the tax and the supplier is not accountable or liable. Greenhouse gas emission allowances are defined in the subsection and are the allowances – sometimes called carbon credits – that are tradable under the EU Emissions Trading Scheme. See section 66 for information on the documentation that is required to be issued by the supplier to the customer in these cases.

(3) A reverse charge for construction services supplied by a subcontractor to a principal applies with effect from 1 September 2008. This subsection provides that, where construction services (which would be within the scope of Relevant Contracts Tax (RCT) under Chapter 2 of Part 18 of the Taxes Consolidation Act 1997) are supplied by a subcontractor to a principal contractor, it is the principal contractor who must account for the VAT on the supply on a reverse charge basis and not the subcontractor. This is also the case where the subcontractor and principal contractor are both established in the State. This reverse charge provision only applies to principal contractors who are involved in construction and not to those involved in the other operations subject to RCT, i.e. meat processing or wood processing.

See section 66 for information on the documentation that is required to be issued by the subcontractor to the principal.

(4) Subsection (4) provides for a reverse charge mechanism to apply, with effect from 1 May 2011, where a taxable person who carries on a business in the State receives scrap metal from another taxable person who carries on a business in the State. The recipient is the accountable person liable to pay the tax and the supplier is not accountable or liable. Scrap metal is defined in the subsection.

(5) Subsection (5) provides for a reverse charge mechanism to apply from 1 May 2012, where an accountable person carrying on a business in the State supplies construction services to a connected person (as defined in section 97(3)) in the course or furtherance of business. The recipient of the construction services is the accountable person liable to pay the tax and the supplier is not accountable or liable. ‘Construction work’ is defined in the subsection.

(6) Subsection (6) provides for a reverse charge mechanism to apply from 1 January 2016, where a taxable dealer (within the meaning of section 31(1)(a)) receives gas or electricity from a taxable person who carries on a business in the State. The recipient is the accountable person liable to pay the tax and the supplier is not accountable or liable. ‘Gas’ is defined in the subsection.

(7) Subsection (7) provides for a reverse charge mechanism to apply from 1 January 2016, where a taxable person who carries on a business in the State receives a gas or an electricity certificate from another taxable person who carries on a business in the State. The recipient is the accountable person liable to pay the tax and the supplier is not accountable or liable. ‘A gas or an electricity certificate’ is defined in the subsection.

Relevant Date: Finance Act 2020