If you an internet based business there are special VAT rules when you supply what us accountants refer to as ‘Electronically Supplied Services’. 

 What are electronically supplied services? and ‘How do the VAT rules affect my internet business’? 

If you would like to read on then you will find the answers to these important VAT issues.

Firstly some definitions are important:

An ’Electronically Supplied Service’ includes a) website supply, web hosting, distance maintenance of programmes and equipment b) supply of software and updating of it c) supply of images, text and information, and making databases available d) supply of music, films and games, including those games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events, and e) supply of distance teaching and ‘electronic services shall be construed accordingly, but where the supplier of a service and his/her customers communicates by means of e-mail, this shall not of itself mean that the service is an electronic service.

If your internet business falls within one of the above definitions then it is an ‘electronically supplied service’. These types of services are now specifically included as ‘fourth schedule services’ (i.e. those that are taxed on the recipient where provided to a non-Irish EU based business but taxed on the supplier where provided to a non-Irish EU private individual).

The consequences of above means that an Irish based internet business would effectively not have to charge VAT to an EU based business outside of Ireland but would charge Irish VAT to an EU based individual outside of Ireland. Supplies by the Irish internet business to an Irish business or private customer will be liable to Irish VAT.

These regulations are clearly very complex to a non-accountant, so if you would like to discuss with me what VAT issues/rates apply to your internet business my contact details are here O’Mahony Donnelly Contact Details