Fourth Schedule Services

• Introduction
• Place of Supply of Fourth Schedule Services
• List of Fourth Schedule Services
• Fourth Schedule Services received from outside the State
• Implications of registering for VAT in respect of received Fourth Schedule Services
• Rates of VAT
• Claim for credit on VAT Return
• Supply of Fourth Schedule Services to a business customer outside the State
• Evidence of the business status of the recipient
• Fourth Schedule Services supplied to a private individual in EU
• Fourth Schedule services supplied to customers resident or established outside the EU
• Fourth Schedule Services - summary table
• Traders with more than one establishment
• Certain Fourth Schedule services supplied in connection with property
• Guide to the services covered in the Fourth Schedule
• Further information
• Appendix I - List of EU Member States

Introduction

Please note that the information contained in this leaflet has ceased to apply with effect from 1January 2010. This is as a result of the introduction of the New Place of Supply Rules effective from this date. Information concerning the new rules is available in the Place of Supply of Services VAT Information leaflet.

1. This information leaflet sets out the VAT treatment of the services listed in the Fourth Schedule to the VAT Act, 1972 (as amended). These are set out in full in Paragraph 3 and a brief guide to them is set out in Paragraph 24.

Place of Supply of Fourth Schedule Services

2. The general rule in relation to the place of supply of services is that they are taxable at the place where the supplier is established. However, certain services are taxable where physically performed or where property is located. Normally, it is the suppliers who account for VAT due. However, there are certain types of services which, because they are generally intellectual or intangible in nature and easily traded internationally, are treated differently when supplied across national boundaries for the purposes of the customer’s business. When they are received from outside the State for business purposes or supplied to a business outside the State, it is the recipient of the service who accounts for any VAT due. It should be noted that where both the supplier and the customer are established in the one State, then the general rule applies i.e. the supplier accounts for any VAT due.

3. The legal provisions are contained in Section 5(6)(e) and the Fourth Schedule to the VAT Act 1972(as amended). The corresponding provisions of the VAT Directive 2006 are contained in Article 52 (a), (b) and (c).

List of Fourth Schedule Services

3. The services are as follows:

1. Transfers and assignments of copyright, patents, licences, trade marks and similar rights;
   (1A) hiring out of movable goods other than means of transport
2. advertising services;
3. services of consultants, engineers, consultancy bureau, lawyers, accountants and other similar services, data processing and provision of information (but excluding services connected with immovable goods);
   • (iiia) Telecommunications services;
   • (iiib) Radio and television broadcasting services;
   • (iiic) Electronically supplied services;
   • (iiid) The provision of access to, and of transport or transmission through, natural gas and electricity distribution systems and the provision of other directly linked services;
4. acceptance of any obligation to refrain from pursuing or exercising in whole or in part, any business activity or any such rights as are referred to in paragraph (i);
5. banking, financial and insurance services (including re-insurance and financial fund management functions, but not including the provision of safe deposit facilities);
6. the provision of staff;
7. the services of intermediaries who act in the name and for the account of a principal when procuring for him any services specified in paragraphs (i) to (vi).

Fourth Schedule Services received from outside the State

4. Persons registered for VAT in the normal course of business who receive any of the taxable services listed in the Fourth Schedule from outside the State must account in Box T1 in their periodic VAT returns, along with their other VAT liabilities, on the invoiced amounts at the appropriate rate as if they had themselves made the supply. They must furnish their VAT number to the supplier. They are entitled to a credit for such VAT accounted for, in Box T2 of the return. Please see paragraphs 12 to 15 for details of entitlement to deductibility.

5. VAT-exempt persons (e.g. bookmakers, banks, insurance companies), and persons whose activities are outside the scope of VAT, such as charitable organizations, who receive taxable Fourth Schedule Services for business purposes from outside the State, must register and account for Irish VAT on these received services. It might be noted that persons in the State which receive Fourth Schedule services from a person established in another EU Member State where VAT is not charged in that EU Member State because the Irish recipient held himself/herself out to the supplier to be an accountable person, are required to self-account for Irish VAT on those received services. They will receive periodic VAT returns from the Office of the Collector General and must account for VAT in Box T1 of the return on the amounts charged to them, as if they had supplied them themselves from within the State. Where such persons receive taxable Fourth Schedule services for the purposes of an exempt business are not entitled to a VAT credit in the VAT return.

6. Government Departments, local authorities and bodies established by statute who receive Fourth Schedule Services from outside the State must register and account for the VAT on these services unless, in cases where they are supplied from another EU Member State, VAT is chargeable by the supplier in that Member State. It may be noted that Section 77 (1)(a) of the Finance Act 2007 provides for a change in the treatment of Fourth Schedule Services received by Government Departments, local authorities, and bodies established by statute. However, this change is subject to a commencement order being made by the Minister for Finance. Such an order has not yet been made.

7. A turnover threshold does not apply to persons in receipt of Fourth Schedule Services. Accordingly, all persons who receive such services from outside the State for business purposes must register and account for VAT.

8. An individual receiving Fourth Schedule Services for private (non-business) purposes is not obliged to register or account for Irish VAT in respect of the receipt of those services. Those services will be taxed in the country of the supplier.

Implications of registering for VAT in respect of received Fourth Schedule Services

9. Exempt persons retain their non-accountable status in respect of their non-accountable activities, even where they are obliged to register and account for received Fourth Schedule Services. Flat-rate farmers, fishermen and race-horse trainers who register in respect of Fourth Schedule Services are entitled to retain their unregistered status in respect of their farming or fishing activities.

10. Businesses which supply taxable goods or services and are not already registered for VAT because they are below the threshold for registration and who, for business purposes, receive Fourth Schedule Services from outside the State, are obliged to register and account for VAT on those services, irrespective of their value. However, once registered for Fourth Schedule Services they are required to account for VAT on all their activities.

Rates of VAT

11. The rate at which VAT is chargeable on Fourth Schedule Services is the same as that which applies to similar services supplied within the State, generally liable at the standard rate. The amount on which VAT is chargeable is the amount payable to the foreign supplier at the rate of exchange (if not in €) applicable on the date of the invoice. The receipt of certain services such as banking, financial and insurance will not give rise to a VAT liability. The supply of distance teaching electronically retains the VAT classification that applies to it when supplied directly.

Claim for credit on VAT Return

12. A person who is registered for VAT in the State is entitled to claim a credit for VAT accounted for on received Fourth Schedule Services for the purpose of his/her taxable activities. Thus, the entries on the VAT return, T1 for accounting and T2 for credit, are self-cancelling and no net VAT is actually paid over in respect of the transaction.

13. A person who is obliged to register for VAT solely in respect of Fourth Schedule Services is not entitled to any VAT credit or deduction in respect of the VAT accounted for on receipt of those services.

14. Persons whose activities are engaged in partly taxable, partly exempt activities in the State will be entitled to a VAT credit only to the extent that the services are for use in the taxable activities of the business.

15. Persons whose activities are outside the scope of the tax or whose activities are exempt from VAT are not entitled to any VAT credit.

Supply of Fourth Schedule Services to a business customer outside the State

16. When an Irish business supplies a taxable Fourth Schedule service to a business customer established in another EU Member State or outside the EU, there is no liability to Irish VAT i.e. they are effectively zero rated. In such cases the place of supply is deemed to be the place of establishment of the recipient. Where the customer is established in another EU Member State, VAT is accounted for in that Member State. Where the customer is in business in another Member State but is not registered for VAT, the Irish supplier of Fourth Schedule Services should still apply the effective zero rate of VAT to the supply.

17. When an Irish business supplies goods or services outside the State only they are not required to register for VAT but are entitled to a repayment of input VAT in accordance with Section 12(1)(b) of the VAT Act. In practice, an Irish business whose supplies consist only of Fourth Schedule Services outside the State is permitted to register for VAT and to reclaim input VAT by means of the VAT return, subject to the normal restrictions.

Evidence of the business status of the recipient

18. Where the service is supplied to a VAT registered customer in another Member State, the supplier must ascertain the VAT Number of the customer and that number, and an indication that the reverse charge applies must be included on the relevant invoice issued by the supplier along with the suppliers’ own VAT Number and the usual information. It is possible to verify the format of a VAT Number at the EU Commission or whether a VAT Number is appropriate to a particular trader by contacting the VIMA Office at vimahelp@revenue.ie.

Fourth Schedule Services supplied to a private individual in EU

19. Fourth Schedule Services supplied to private individuals are subject to Irish VAT, even if the individual resides in another EU Member State.

Fourth Schedule services supplied to customers resident or established outside the EU

20. Fourth Schedule services supplied to customers resident or established outside the EU are not subject to Irish VAT whether received for private or business purposes.

Fourth Schedule Services - summary table

21.

The person liable to pay Irish VAT in respect of Fourth Schedule Services

* Telecommunications

Where telecommunications services are supplied to a private customer and the effective use and enjoyment of these services takes place within the State, the place of taxation is Ireland and VAT registration by the supplier is required.

** Electronically Supplied Services (e-Services)

The ‘business to consumer’ place of supply rule for e-services provides that, where a non-EU business supplies such services to a private consumer in any Member State, the place of supply will be 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 the State. See VAT Information Leaflet - e-Services and Broadcasting.

Traders with more than one establishment

22. A trader may have a number of establishments within the EU or indeed outside the EU. The place where the service is deemed to be received for VAT purposes is the establishment of the trader at which, or for the purposes of which, the services are most directly used or to be used, as the case may be.

Certain Fourth Schedule services supplied in connection with property

23. It should be noted that services of consultants, lawyers, accountants and other similar services listed at Paragraph (iii) of the Fourth Schedule are not treated as Fourth Schedule Services where they are connected with property. Property includes land, roads, buildings, walls and fences.

24. Examples of property related services are:

• Services in connection with the supply or letting of property or a license relating to property
• Services supplied in the course of construction, alteration, demolition, repair or maintenance of any building.
• Services of estate agents, auctioneers, valuers, architects, surveyors, engineers and similar professional people relating to land and buildings. This includes the management, conveyancing, survey or valuation of property by a solicitor, surveyor or loss adjuster or on-site supervision of property.

Such services are taxable by reference to the place where the property is located.

Fourth Schedule services which are not related to property include:

• The hire of movable goods or plant and machinery on their own.
• The supply or secondment of staff other than as part of a contract by the supplier to undertake the work for which the staff are employed.
• A general assessment of the property market with a view to investment.

Guide to the services covered in the Fourth Schedule

25. The following provides a more detailed breakdown of the list of services covered in the Fourth Schedule.

1. Transfers and assignments of copyright, patents, licences, trade marks and similar rights;
   This relates to rights to intellectual property in return for royalties and covers, for example, the transfer of rights in respect of text, publications, music, software, film, television or radio recordings, images, photographs in return for royalties or other form of payment. It does not include a right granted, for example, to a supplier of goods or services to enter a premises to carry on his/her business. The supply of standarised software (e.g. games) other than electronically is a supply of goods and VAT must be accounted for as an intra-community acquisition of goods or at the point of importation when coming from outside the EU.
   1. hiring out of movable goods other than means of transport;
      This includes the hiring of plant and machinery, industrial and commercial equipment. It should be noted that the place of supply of the hiring out of movable goods to a customer in the State by a person established outside the EU is considered to be the place where the movable goods are effectively used and VAT registration in the State is required. Please note, the hiring out of means of transport is taxable where the lessor has established his/her business – please see VAT information Leaflet E services and Broadcasting.
2. advertising services;
   This includes the provision of promotional services, product endorsement, publicity, advertising space or time in the media.
3. services of consultants, engineers, consultancy bureau, lawyers, accountants and other similar services, data processing and provision of information (but excluding services connected with immovable goods);
   • Consultants:
     - This includes the provision of professional advice such as business analysis, research and development, software maintenance, other than site-specific services related to property. While scientific services are taxable by reference to the place where they are physically performed, services such a laboratory analysis which forms the basis of a professional assessment of goods by the laboratory, are considered as the services of a consultant.
   • Engineers:
     - This includes design of products or systems. It does not include repair services or services connected with property.
   • Lawyers:
     - This includes services provided by solicitors and barristers. It does not include conveyancing services relating to property, but it does include the general administration of an estate even if that estate includes property. The services of arbitrators are not considered to be the services of a lawyer or similar services.
   • Accountants:
     - The services of a bookkeeper or administration services are not considered to be Fourth Schedule services. Payroll services are likewise not considered to be Fourth Schedule services.
   • Other Similar Services:
     - The provision of similar services to those provided by consultants, engineers, lawyers, and accountants etc. by professionals are generally covered under this. Examples include creative design services, management services, services of loss adjusters, assessors, surveyors provided they are not supplied in connection with property. Services which are cultural, artistic, sporting, scientific or entertainment services are generally excluded (please see ‘Consultants’ above for further details of certain scientific type services). Educational services are also generally excluded but electronically supplied distance teaching is considered to be a Fourth Schedule service.
   • Data Processing:
     - This can be loosely described as the provision of information in a particular format through the processing of supplied data.
   • Provision of Information:
     - This includes the supply of information of any nature in any form, such as customer support services, commercial data and on-line information.
   
   It should be noted again that any of the above listed services do not retain their Fourth Schedule status where supplied in connection with property. See paragraphs 23 & 24 .
   1. telecommunications services;
      This means services relating to the transmission, emission or reception of signals, writing, images and sounds of information of any nature by wire, radio, optical or other electromagnetic systems and includes
      • the related transfer or assignment of the right to use capacity for such transmission, emission or reception, and
      • the provision of access to global information networks
   2. radio and television broadcasting services; This includes, for example, radio and television signal received by VAT registered pubs and clubs who buy in those broadcasting services from suppliers established in other Member States or outside the EU.
   3. electronically supplied services; This includes, for example,
      • website support, web-hosting, distance maintenance of programmes and equipment
      • supply of software and updating of it
      • supply of images, text and information, and making databases available,
      • supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events
      • supply of distance teaching.
      
      It should be noted that where a supplier and his/her customer communicates by means of electronic mail, this shall not of itself mean that the service performed is an electronic service. Please see VAT Information Leaflet - e-Services and Broadcasting.
   4. the provision of access to, and of transport or transmission through, natural gas and electricity distribution systems and the provision of other directly linked services; Charges incurred for services consisting of access to and transmission through gas and electricity distribution systems are taxed where the business customer using these services is located. The treatment also applies for other directly linked services such as grid management, monitoring etc
4. acceptance of any obligation to refrain from pursuing or exercising in whole or in part, any business activity or any such rights as are referred to in paragraph (i);
   This includes entering into an agreement not to exercise a right of the type referred to in paragraph (i) above.
5. banking, financial and insurance services (including re-insurance and financial fund management functions, but not including the provision of safe deposit facilities);
   This includes exempt financial services of a kind listed in the First Schedule of the VAT Act as well as taxable financial services such as financial and investment advice, safe-keeping services, factoring, rent and debt collection, and other taxable financial services.
6. the provision of staff;
   This involves the supply or secondment of staff where the staff are placed under the direct control of the other party as employees and the supplier is not contracted to undertake the work for which the staff are being employed.
7. the services of intermediaries who act in the name and for the account of a principal when procuring for him any services specified in paragraphs (i) to (vi);
   This includes services of agents such as copyright agents and advertising agents in procuring for their principals any of the services listed in the Fourth Schedule.

Further Information

Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer’s affairs. Registration forms TR1 - Tax Registration form for Sole Traders, Trusts and Partnerships and TR2 - Tax Registration form for Companies are available, along with general information on VAT and other taxes from the Revenue website at www.revenue.ie. Contact details for all Revenue Districts can be found on the Revenue website at Contact Details.

This leaflet is issued by:

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

April 2010

Appendix 1 - List of EU Member States

• AT - Austria
• BE – Belgium
• BU - Bulgaria
• CY - Cyprus
• CZ - Czech Republic
• DE - Germany
• DK - Denmark
• EE - Estonia
• EL - Greece
• ES - Spain
• FI - Finland
• FR - France
• GB - United Kingdom
• HU - Hungary
• IE - Ireland
• IT - Italy
• LT - Lithuania
• LU - Luxembourg
• LV - Latvia
• MT - Malta
• NL - Netherlands
• PL - Poland
• PT – Portugal
• RM - Romania
• SE - Sweden
• SL - Slovenia
• SK - Slovakia