Transport of Goods and Ancillary Services within the EU

Revenue Legislation Services

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).

1. General

Special rules apply to the transport of goods between EU Member States. These rules are set out in this information leaflet and for convenience the treatment is summarized in Appendix 1 to this leaflet.

2. EU intra-Community goods transport services supplied by persons registered for VAT in the State

2.1 Where a person registered for VAT in the State supplies EU intra-Community goods transport services, that is, the transport of goods from one EU Member State to another, to a customer registered for VAT in the State, the supplier is liable to Irish VAT and must account for it in the normal way (same as internal transport services).

2.2 Where a person registered for VAT in the State supplies such services to customers registered for VAT in another EU Member State no Irish VAT liability arises for the supplier. The customers are, however, obliged to account for VAT in their own Member States as if the customers themselves had supplied the services.

2.3 If a customer is not registered for VAT (e.g. a private individual) the supply of intra-Community goods transport services is taxable in the place of departure i.e. where the transport of the goods begins. In the case of the transport of goods on behalf of a private individual from Ireland to the UK. liability to VAT arises in Ireland because that is the place of departure; in the case of haulage on behalf of a private individual from the UK to Ireland liability arises in the UK. Suppliers of intra-Community goods transport services to unregistered persons should note that if they are providing services which are taxable in another Member State they are subject to the rules relating to VAT in that other Member State.

3. Domestic transport services supplied as part of EU intra-Community transport services

3.1 Where a domestic goods transport service (i.e. where transport begins and ends in the State) is supplied to a person registered for VAT in another Member State and that service forms part of an intra-Community goods transport service, no Irish VAT liability arises for the supplier and the customer should account for VAT in his/her own Member State as if s/he had supplied the service. In effect the supplier treats the supply as if it were an intra- Community transaction.

3.2 An example of this would be where a shipping company, registered for VAT in the U.K. is contracted to transport goods from London to Athlone. The shipping company transports the goods from London to Dublin and then employs an Irish transporter to transport the goods from Dublin to Athlone. In this example the Irish transporter will invoice the U.K. shipping company free of VAT. The U.K. company accounts for the VAT on this transaction in the U.K. on the reverse charge basis.

3.3 The Irish transporter must obtain and retain for subsequent inspection documentary evidence to confirm that the service provided by him/her is part of an overall intra- Community transport service.

3.4 It should be noted that this arrangement does not apply to wholly domestic goods transport services, even where these are supplied to a person registered for VAT in another Member State. Neither does it apply to a domestic goods transport service supplied as part of intra-Community goods transport services supplied to Irish VAT-registered customers by transporters registered for VAT in the State. In both these cases Irish VAT is chargeable.

4. Domestic and EU intra-Community transport services supplied in connection with transport of goods into and out of the EU(Imports and Exports)

4.1 Expenses incurred in the transport of imported goods to their place of destination within the EU should be included in the value for VAT at point of entry, if known and taxed accordingly. The effect of this is that the internal EU transport costs will attract the same rate of VAT as that chargeable on the goods at importation.

4.2 Where the costs of transport within the EU are included in the value for VAT at importation and charged with VAT accordingly the transport service itself is then zero-rated.

4.3 A haulier providing zero-rated transport services in these circumstance is obliged to obtain and retain for subsequent inspection, documentary evidence that the transport costs were included in the value for VAT at importation.

4.4 If the onward transport costs are not known at the time of importation and therefore not included in the value for tax at point of entry, then the transport service may be liable at a positive rate (see Appendix I).

4.5 Transport services supplied in connection with goods which are to be exported out of the EU are not affected by this provision. Such services will continue to be zero-rated provided, of course, that the transporter is in a position to satisfy the Inspector of Taxes that the zero-rating correctly applies and that s/he holds documentary evidence that the transportation in question is part of an export transportation service.

5. Ancillary services in Ports and Airports

5.1 Services ancillary to intra-Community goods transport (i.e. loading, unloading, handling etc) supplied in port areas or in airports to meet the direct needs of ships or aeroplanes is zero-rated. This zero-rating applies for example to loading, unloading and handling of cargo in the port or airport, limited storage in the port or airport (no more than five days) while awaiting the onward transport of the goods. A more comprehensive list of the services affected is contained in Appendix III.

5.2 The zero-rating referred to in paragraph 5.1 does not apply to services ancillary to intra-Community goods transport supplied beyond the direct needs of ships and aeroplanes, such as breaking down of containers, packing or repacking and similar handling services supplied in connection with the onward distribution of goods, etc. Long term storage and warehousing of goods also continues to be taxable in the normal way.

5.3 Ancillary services in connection with intra-Community goods transport supplied outside of ports and airports are taxable by reference to the normal rules applying to transport services. Where supplied to an Irish VAT-registered or to an unregistered customer they are liable to Irish VAT. Where supplied to a customer registered for VAT in another Member State VAT liability arises in that other Member State in the customer’s hands.

5.4 Services ancillary to the import and export of goods into and out of the EU will continue to be zero-rated in the normal way.

6. Intermediary services supplied by Irish VAT-registered persons

6.1 The treatment of intermediary services (e.g. shipping agents) in connection with intra- Community goods transport and ancillary services is the same as that which applies to the services themselves. Such agency services supplied to VAT-registered persons are taxed by reference to the Member State of registration of the customer. In the case of such agency services supplied to unregistered persons, liability arises in the Member State where the transport begins or the ancillary service is carried out.

7. VAT status of immediate customer

Suppliers of goods transport services should note that it is the VAT status of the immediate customer for the haulage or ancillary service that determines the VAT treatment of the supply. For example, where a supplier of goods transport services is contracted by a freight forwarder to transport goods belonging to a third party to another Member State, it is the VAT status of the freight forwarder that determines the treatment of the supply rather than the VAT status of the owner of the goods.

8. Verification of customers’ VAT numbers

8.1 As outlined above, the VAT status of the customer is the key element in determining the VAT treatment of intra-Community goods transport and ancillary services. Traders are advised to contact their EU customers and ask them to confirm in writing their VAT registration number. (An example of the type of letter that might be used for this purpose is attached in Appendix II). The customers VAT Number must be shown on the invoice issued by a transport operator in connection with intra-Community transport.

8.2 Where a trader who has doubts about the validity of a VAT number quoted he/she may contact Revenue at vimahelp@revenue.ie to establish whether a particular number is valid. The system is primarily intended to be used in such circumstances and is not intended for routine checks. Use of the verification system is not obligatory and traders who are aware of their customers’ bona fides from trading with them over a period of time are not expected or required to use the verification system. A trader may also contact the EU Commission website at http://ec.europa.eu/taxation_customs/vies/vieshome.do?selectedLanguage=EN in this regard.

9. Customers registered for VAT in the State

9.1 Customers registered for VAT in the State receiving intra-Community goods transport and related services from suppliers registered for VAT in the State are charged Irish VAT at the standard rate which may be deducted in accordance with the normal VAT rules relating to deductibility.

9.2 Customers registered for VAT in the State receiving such services from suppliers who are not registered in Ireland but are registered in another Member State are not charged VAT by their suppliers. However, these customers must account for Irish VAT in respect of such services as if the customers themselves had supplied the services. This is done by declaring a liability to VAT at the standard rate in the VAT return. Customers entitled to full or partial deduction of VAT charged to them simultaneously take a deduction of all or some of the tax, as appropriate. Customers who are not entitled to deduction in full or in part of the tax must pay the tax for which they are liable when sending the VAT return to the Collector-General.

9.3 The same procedure will be followed by customers registered for VAT in other Member States who receive intra-Community goods transport services from suppliers registered for VAT in Ireland

10 VAT at importation; treatment of onward transport costs

10.1 Where the onward costs are known at the time of importation, whether shown separately or not, they are included in the amount which is subject to VAT at the point of entry and taxable at the rate applicable to the supply of the goods in the State. Where, for example, goods are imported into Ireland for onward movement to another Member State, or vice versa, then if the value of the haulage is included in the amount subject to VAT at the point of entry the haulage service is zero-rated.

Further Information

Further information in the form of questions and answers is contained in Appendix I. 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 can be found on the Contact Details page.

This leaflet is issued by

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

October 2008

Appendix 1

Intra EU Goods Transport Treatment in Single Market

Note: In most cases Irish VAT can be claimed as a credit by a VAT-registered trader

Appendix II

Example: Confirm in writing your VAT registration number

Dear Customer,

VAT/TVA/IVA/MWSt/BTW

To comply with EU regulations, we must show your VAT/Sales Tax Number on our invoices.

To help us with this, could you please fill in the box below with your VAT/Sales Tax Number and return it to us as soon as possible. Please ensure that the country prefix is included.

N.B. If you are not registered for VAT, please tick

In addition, to help us update our records, please forward your:

Telephone No. .............................

Fax No. ...................................

Address ....................................

E. mail .....................................

Thank you.

Yours faithfully,

Appendix III

Ancillary transport services to which the zero-rate applies when supplied in ports and airports

• River and harbour pilotage
• Mooring and unmooring
• Stevedoring
• Landing
• Stowing
• Loading
• Restowing
• Cranage
• Tonnage dues
• Cargo dues
• Towage