Revenue Note for Guidance

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Revenue Note for Guidance

18. Distortion of competition, deemed taxable supplies, etc.

Summary

This is the final section in Part 2. It contains miscellaneous provisions in relation to accountable persons.

  • It sets out the rules under which Revenue may make a determination providing that normally exempt sports services or educational activities are subject to VAT.
  • It provides that clubs selling goods and services to their members are liable to VAT on the receipts, where the registration thresholds are exceeded.
  • It establishes that the licensee is liable to VAT on the amounts received in connection with a dance held on premises licensed to sell alcohol.

Details

(1)(a) Subsection (1) provides that Revenue is required to make a determination subjecting normally exempt sports services or educational activities to VAT where the relevant turnover exceeds the services threshold of €37,500 per annum and they are satisfied that—

  • The exemption of the service puts a commercial rival at a competitive disadvantage, or
  • The service is actually a commercial one operating behind a ‘not-for-profit’ facade.

The determination, which is made by an authorised Revenue officer, deems—

(a) the service supplied to be a business as normally defined for VAT,

(b) the person supplying the service to be an accountable person for the purposes of VAT, and

(c) the supplies to be taxable at the appropriate rate of VAT.

(1)(b) Revenue must issue a notice in writing of any determination to the person concerned.

(1)(c) Where taxation is being imposed, it may not commence any sooner than the start of the next VAT period following the issue of the notice.

(1)(d) Revenue may, where they are satisfied that the relevant distortion of competition no longer exists, cancel any determination made under this subsection. A notice must be issued in writing of the cancellation of a determination to the person concerned, and the cancellation applies from the start of the next taxable period following the issue of the notice.

(2) Under subsection (2), clubs or other similar organisations, which sell goods or services to their members, are deemed to be making supplies in the course or furtherance of business. This means they are liable to VAT on the receipts from those activities, if they exceed the limits for registration. However, their membership subscriptions will normally be exempt from tax.

(3) Subsection (3) contains a special provision in relation to the treatment of dances held on premises licensed for the sale of intoxicating liquor. The licensee is deemed to have received the admission charges and is liable to account for VAT on these receipts.

The subsection applies only to dances held on licensed premises. Persons organising dances on premises that are not licensed are subject to the normal VAT rules, under which the promoter is obliged to register and account for VAT if his/her annual turnover exceeds the services threshold, which is defined in section 2(1).

Relevant Date: Finance Act 2020