The VAT treatment of land related services can often be a complex area, the specific nature of the services as well as the status of the person acquiring and the person supplying these services need to be considered to determine the correct VAT treatment.

The general rule governing the place of supply (POS) of services in s business to business (B2B) transaction is where the recipient is established. However, there are exceptions to this, in principle, it is assumed that when the supply of services is connected with immovable property, as understood by Article 13b of Regulation 282/2011/EU , the POS for VAT purposes is the place where the property is located. This is in line with the well-recognised principle of “taxation at destination” which operates in VAT across the EU.

It is therefore important to determine whether a supply is regarded as “services connected to immovable property” and for that it is generally understood that a service is ‘connected’ when it directly relates to specific property. We have listed below some of the services considered connected with immoveable property, reference should be made to Section 33 and Section 34(c) of the VAT Consolidation Act 2010 and Article 31a and 31b of Council Implementing Regulation 282/2011/EU.

Services generally considered to be connected to immoveable property:

• Drawing plans for a building designated for a particular site

• Providing on-site supervision or security services

• Construction or other works (including maintenance/repairs) performed on land or buildings or permanent structures attached to the land such as gas/water pipelines

• Work on land, including agricultural services

• Surveying and assessment of the risk and integrity of immovable property

• The valuation of immovable property

• The leasing or letting of immovable property including in some cases the storage of goods

• Accommodation in the hotel/guest sectors

• Assignment or transfer of rights such as licences to use part of a property, fishing rights, access rights, use of toll roads

• Installing/assembling machines/equipment which are the considered as immovable property.

• Property management services

• Intermediation in the sale, leasing or letting of immovable property

• Legal services relating to the transfer of a title to immovable property, for example, drawing up of a contract to sell or acquire immovable property

VAT rate to be applied

The VAT rate to be applied will depend on the nature of the service supplied, the following rates would generally apply:

1. Professional services connected with property, such as legal, auctioneers, architects, surveyors and so on, are liable to VAT at the standard rate (23%).
2. Services consisting of the development of immovable goods are liable to VAT at the reduced rate (13.5%), subject to the two-thirds rule.
3. Hotel accommodation, and other accommodation e.g., guesthouses, camp sites, are currently liable to VAT at the second reduced rate (currently 9%, will revert to 13.5% from 31 August 2023).

Accountable person

Once it is determined that the services are connected to immovable property and that the POS is Ireland, the person responsible for accounting for the VAT due needs to be considered and here is where taxpayers sometimes encounter difficulties. The VAT treatment can depend to a large extent of the status of the person acquiring or supplying those services and whether the supply is subject to the same rules as a local domestic supply in Ireland. In some cases, the services in question could be supplied under the reverse charge mechanism using the general B2B cross border rules, however, if not, does this then create an obligation for a person who is not VAT registered in Ireland and is making or receiving such services to become Irish VAT registered?

Let’s consider the VAT treatment from both a supplier’s and a customer’s perspective. For the avoidance of doubt, we have assumed that the services are land-related and the POS is Ireland in the scenarios set out below.

What are the VAT obligations when supplying services related to immoveable property in Ireland?

A supplier of land related services who is both established and VAT registered in Ireland will have to account for Irish VAT at the applicable rate where the customer is also in Ireland.

The position is not always this clear cut, a supplier of land related services who is not VAT established nor registered in Ireland, would need to consider the nature of the services and the status of their customer. If the supply, for example, relates to accommodation services in Ireland the supplier will have to be registered for, and charge, Irish VAT irrespective of the customer’s VAT status.

For construction services, the supplier, would also need to be registered for, and charge, Irish VAT for both B2C and B2B supplies, unless the customer is a ‘Principal’ for Relevant Contracts Tax where a specific VAT reverse charge mechanism typically applies. Actual on-site construction operations are taxed where the property is located and this would also include all building and construction service providers, architects, (which are specifically mentioned), engineers, surveyors, decorators, site supervisors, etc providers where the supplier has a specific onsite function concerning a specific property.

For some services, a supply by ‘experts or estate agents’, which although can be considered connected to immovable property and if related to Irish property the place of supply would be Ireland, do not require a non-established person to VAT register in Ireland. For these services, where the recipient is a ‘taxable person’ or a public body the onus to account for the VAT due shifts to the person receiving the service who would self-account using the reverse charge mechanism.

Further considerations

In our view, both suppliers and customers providing and/or receiving land related services where the property is located in Ireland should take the necessary steps to ensure that VAT is being accounted for by the right person at the appropriate rate in line with Irish VAT Law. Careful consideration is required to determine whether or not the receipt of such land related services creates an obligation to be VAT registered in Ireland.

If you have any questions on this matter, please do not hesitate to get in touch with Daniel Baquerin or any of the team below.