Exemption from VAT
If an activity is VAT exempt, there is no entitlement to register. Equally, there is no obligation to charge VAT. The status may not be as advantageous as first appears, as there is no entitlement to recover VAT. This can sometimes be unexpectedly costly, particularly in respect of property acquisitions.
Some exempt supplies when provided to persons abroad, qualify for VAT reclaim. They are called qualifying activities. They include in particular the supply of goods outside the State which would be taxable if made in the State.
They also include exports of goods and certain classes of services provided to persons outside the European Union.This is separate to VAT registration and involves a stand-alone application to Revenue Commissioners. See the chapter on deductions
Public Bodies & Utilities
The principal exempt activities are listed in the legislation and published by the Revenue Commissioners. They include:
- Public postal services;
- importation of gas or electricity
- supply of water
FA 2011 provides for an exemption from VAT for postal services, provided that it is part of the universal service. FA 2011 extends the benefit of an exemption from VAT for public bodies, which would otherwise have to account for VAT in the supply of cultural services. An exemption for recognise cultural bodies remained.
- Hospital and medical care provided by a hospital, nursing home or clinical services closely related to medical care;
- Services closely related to medical care provided by the HSE or recognise care providers
- Professional medical care services other than dental or optical services ( not supplied in the course of business consisting of the sale of goods in whole or in part) by an entity recognised by the Department of Health
- Other medical services recognised by Revenue Commissioners
- professional Medicare services;
- Dental services including by dentists and dental technicians and dentures;
- Optical services;
Social and Welfare
- Supply of goods and services closely related to welfare and Social Security by nonprofitmaking bodies
- supply of services by independent bodies rendering services to their members in carry on their activities recovering only from the members their exact share of the expenses incurred
- Supply of services and goods closely related to the services for the benefit of members of nonprofitmaking organisations with the objectives of a political religious trade union philanthrophic or civic nature where made without payment other than of membership subscription
- provision of facilities for sports and educational activities or services closely related to them by a nonprofitmaking body (exceptions and limits apply)
- The supply of cultural services and supply of goods closely related to such services by a public body or cultural body recognised by revenue Commissioners
Care and Education
- Supply of services for the protection and care of children and young persons and goods closely related by providers regulated under the Child Care legislation including
- protection education or care of children or young persons;
- provision by educational establishments recognized by the State of children’s or young persons education, School or university education; Vocational training and retraining
- the provision by other persons of education training and retraining of a similar kind;The training or education must be structured in a classroom or online setting with arelationship between teacher and student, a clear syllabus and objective standards. Certain other types of educational activities are exempt including sports one to one language teaching music teaching arts and craft . Revenue have published guidance on the area
The Finance Act 2015 amends the scope of the exemption from VAT applicable to educational, vocational training and retraining for children and young persons. The exemption applies only where the activity is carried out by recognised bodies. Bodies covered prior to the legislation continue to be VAT exempt.
Provision is made for the exemption of tuition given privately by teachers covering school and university education. This is in line with EU Court of Justice judgments. Provision is made for the Revenue making a determination that a specified educational activity is subject to VAT where VAT exemption would distort competition.
The supply of real property is exempt under many circumstances. There are provisions whereby the exemption may be waived so the VAT is recovered on input/purchases and is chargeable on supplies and/sales.
Certain holiday home lettings and the letting of other facilities are not exempt. Letting of machinery and business installation separately to real property in which it is installed is not exempt
Most areas of financial services are exempt from value added tax. This has the corresponding consequence that these businesses cannot recover VAT on the purchases. They may be able to cut recover VAT in relation to financial services provided outside the European Union which are qualifying activities.
The exemption for financial services applies to dealing in shares and securities, arranging for their issue, operating accounts, banks, credit firms, mutual funds and collective investments, insurance services, claims handling.
The following are the principal financial services exempt from value added tax
- core banking services
- purchase and sale of debts
- insurance services
- fund management (including pensions)
- receipt of dividends
- Dealing in shares and debentures and other securities
Some elements of a particular institutions services may be subject to VAT. Accordingly it may have recoverability on inputs related to that services or proportionate recoverability for expenses in respect of both the VAT exempt and none VAT exempt businesses.
Betting that is subject to excise duty or enjoying certain exemptions from betting duty is exempt from VAT. VAT is not applicable on the sums to betting duty and remote betting duty under Finance Act 2010.
The Finance Act 2011 provision extending VAT exemptions to bets placed by customers in Ireland and commissions charged by VAT intermediaries was commenced on 1 August 2015.
Finance Act 2015 extends the VAT exemption to bets placed by customers located outside Ireland and to commission charged by remote betting intermediary. This is to ensure that there is no distortion of competition.
- Catering services in schools and hospitals are exempt
- Promotion or admission to live theatrical and musical performances including circuses but excluding dances and excluding performances where facilities for food or drink are available during the performance;
- Promotion of sporting events
- Provision of national broadcasting and television services
- funeral services.