PART III

Value-Added Tax

95. —In this Part—

“the Principal Act” means the Value-Added Tax Act, 1972 ;

“the Act of 1978” means the Value-Added Tax (Amendment) Act, 1978 ;

“the Act of 1992” means the Finance Act, 1992 ;

“the Act of 1993” means the Finance Act, 1993 ;

“the Act of 1996” means the Finance Act, 1996.

96. —Section 1 of the Principal Act is hereby amended in subsection (1)—

(a) by the insertion after the definition of “Appeal Commissioners” of the following definition:

“‘assignment’, in relation to an interest in immovable goods, means the assignment by a person of that interest in those goods or of any part of those goods to another person:

Provided that where that other person at the time of the assignment retains the reversion on that interest in those goods, that assignment shall be a surrender;”,

(b) by the insertion after the meaning assigned to “supply” of the following definition:

“‘surrender’, in relation to an interest in immovable goods, means the surrender by a person (hereafter referred to in this definition as ‘the lessee’) of an interest in those goods or any part of those goods to the person (hereafter referred to in this definition as ‘the lessor’) who at the time of the surrender retains the reversion on the interest in those goods and also includes the abandonment of that interest by the lessee and the failure of the lessee to exercise any option of the type referred to in subsection (1)(b) of section 4 in relation to that interest and surrender of an interest also includes the recovery by the lessor of that interest in those goods by ejectment or forfeiture prior to the date that that interest would, but for its surrender, have expired;”,

and

(c) by the insertion after the definition of “taxable services” of the following definition:

“‘telecommunications services’ means services relating to the transmission, emission or reception of signals, writing, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including the transfer or assignment of the right to use capacity for such transmission, emission or reception;”.

97. —Section 3A (inserted by the Act of 1992) of the Principal Act is hereby amended in paragraph (a) of subsection (1) by the insertion after “supplied by a person registered for value-added tax in a Member State,” of “or by a person obliged to be registered for value-added tax in a Member State,”.

98. —Section 4 of the Principal Act is hereby amended—

(a) in subsection (1):

(i) by the substitution of the following paragraph for paragraph (b):

“(b) In this section ‘interest’, in relation to immovable goods, means an estate or interest therein which, when it was created was for a period of at least ten years or, if it was for a period of less than ten years, its terms contained an option for the person in whose favour the interest was created to extend it to a period of at least ten years, but does not include a mortgage, and a reference to the disposal of an interest includes a reference to the creation of an interest, and an interval of the type referred to in subsection (2A) shall be deemed to be an interest for the purposes of this section.”,

and

(ii) by the insertion of the following paragraph after paragraph (b):

“(c) Where an interest is created and, at the date of its creation, its terms contain one or more options for the person in whose favour the interest was so created to extend that interest, then that interest shall be deemed to be for the period from the date of creation of that interest to the date that that interest would expire if those options were so exercised.”,

(b) in subsection (2) by the insertion after “disposes” of “(including by way of surrender or by way of assignment)”,

(c) by the insertion of the following subsections after subsection (2):

“(2A) Where the surrender of an interest in immovable goods is chargeable to tax, and those goods have not been developed since the date of creation of that interest (hereafter referred to in this subsection as a ‘surrendered interest’), and the person to whom the surrendered interest was surrendered subsequently disposes, as regards the whole or any part of those goods, of an interest or of an interest which derives therefrom on a date before the date on which the surrendered interest would, but for its surrender, have expired, then that disposal shall be deemed to be a supply of immovable goods, for the purposes of this Act, and where the interest (hereafter referred to in this section as a ‘subsequent interest’) disposed of is for a period which extends beyond the date on which the surrendered interest would, but for its surrender, have expired, the disposal of that subsequent interest shall be treated, for the purposes of this Act, as if it were the disposal of an interest for the period equal to the interval between the date of the disposal of the subsequent interest and the date on which the surrendered interest would, but for its surrender, have expired (a period hereafter referred to in this section as an ‘interval’), and where such interval is for a period of less than ten years, that disposal shall be treated as a supply of immovable goods to which subsection (6) applies:

Provided that the person, who disposes of a subsequent interest in which the interval is for a period of less than ten years, may opt, subject to and in accordance with regulations, if any, to have that disposal treated as a supply of immovable goods to which subsection (6) does not apply.

(2B) Where a person disposes of a subsequent interest in such circumstances that such person retains the reversion on the interest disposed of, then—

(a) if the subsequent interest expires on or after the date on which the surrendered interest which enabled that person to dispose of a subsequent interest (hereafter referred to in this subsection as ‘the surrendered interest’) would, but for its surrender, have expired, the provisions of subsection (4) shall not apply to that reversion;

(b) if the subsequent interest expires prior to the date on which the surrendered interest would, but for its surrender, have expired, the provisions of subsection (4) shall apply to that reversion and that reversion shall be deemed for the purposes of subsection (4) to be for the period between the date of expiry of the subsequent interest and the date on which the surrendered interest would, but for its surrender, have expired.

(2C) Where the surrender of an interest in immovable goods is chargeable to tax, and those goods have not been developed since that interest was created and the person to whom the interest that was surrendered surrenders possession of those goods or any part thereof, on a date before the date on which the interest that was surrendered would, but for its surrender, have expired, in such circumstances that that surrender of possession does not constitute a supply of goods, that surrender of possession shall be deemed for the purposes of section 3(1)(f), to be an appropriation of the goods or of the part thereof, as the case may be, for a purpose other than the purpose of that person's business except where such surrender of possession is made—

(a) in accordance with an agreement for the leasing or letting of those goods where the person surrendering possession is chargeable to tax in respect of the rent or other payment under the agreement, or

(b) in connection with a transfer which, in accordance with section 3 (5), is deemed, for the purposes of this Act, not to be a supply.”,

and

(d) by the insertion of the following subsection after subsection (7):

“(8) Where tax is chargeable in relation to a supply of immovable goods which is a surrender of an interest in immovable goods or an assignment of an interest in immovable goods to—

(a) a taxable person,

(b) a Department of State or a local authority, or

(c) a person supplying goods of a kind referred to in paragraph (a) of the definition of ‘exempted activity’ in section 1 or services of a kind referred to in paragraphs (i), (iv), (ix), (xi), (xia), (xiii) and (xiv) of the First Schedule, in the course or furtherance of business,

then, for the purposes of this Act, the person to whom the goods are supplied shall be deemed to supply those goods in the course or furtherance of business and shall be liable to pay the said tax and in that case the person who makes that surrender or assignment shall be deemed not to supply the goods:

Provided that where a Department of State or a local authority is deemed to make a supply under this subsection, an order under subsection (2A) (a) of section 8 shall be deemed to have been made in respect of that supply.”.

99. —Section 5 of the Principal Act is hereby amended in subsection (6) by the insertion of the following paragraph after paragraph (d):

“(dd) Notwithstanding the provisions of subparagraph (v) of paragraph (e), where a person supplies a telecommunications service in the course or furtherance of business from outside the Community to a person in the State who is not a person to whom the provisions of subparagraph (ii), (iii) or (iv) of paragraph (e) apply, the place of supply of that service shall be deemed, for the purposes of this Act, to be the State.”.

100. —Section 7 of the Principal Act is hereby amended—

(a) by the addition of the following proviso to subsection (1):

“Provided that where a person waives his right to exemption from tax in respect of the leasing or letting of goods which are subject to an agreement of the type referred to in section 4(2C)(a) then that waiver shall only apply to the supply of services under that agreement.”,

and

(b) by the substitution of the following subsection for subsection (3):

“(3) Provision may be made by regulations for the cancellation, at the request of a person, of a waiver made by him under subsection (1) and for the payment by him to the Revenue Commissioners as a condition of cancellation of such sum (if any) as when added to the total amount of tax (if any) due by him in accordance with section 19 in relation to the supply of services by him to which the waiver applied is equal to the total of—

(a) the amount of tax deducted by him in accordance with section 12 in respect of tax borne or paid in relation to the supply of such services,

(b) the amount of tax that would be deductible by him in accordance with section 12 if tax had been chargeable on the transfer of ownership of goods to him in respect of which the provisions of section 3(5)(b)(iii) were applied, and those goods were used by him in the supply of such services, and

(c) the amount of tax that would be deductible by him in accordance with section 12 if tax had been chargeable on the supply to him of goods or services in respect of which the provisions of paragraph (via) of the Second Schedule were applied, and those goods or services were used in relation to the supply of services by him to which the waiver applied.”.

101. —Section 8 of the Principal Act is hereby amended in subsection (3)—

(a) by the substitution of the following paragraph for paragraph (a)

“(a) a farmer, for whose supply in any continuous period of twelve months of—

(i) agricultural services, other than insemination services, stock-minding or stock-rearing, the total consideration has not exceeded and is not likely to exceed £20,000, or

(ii) goods of the type specified in paragraph (xia) of the Sixth Schedule to persons who are not engaged in supplying those goods in the course or furtherance of business, the total consideration has not exceeded and is not likely to exceed £40,000, or

(iii) services and goods specified in subparagraph (i) and (ii), the total consideration has not exceeded and is not likely to exceed £20,000,”,

and

(b) by the insertion of the following subparagraph after subparagraph (i) in the proviso to the subsection:

“(ia) where a farmer supplies services or goods of the kind specified in paragraph (a)(i) or (a)(ii), subparagraph (i) of this proviso shall be deemed to apply to those supplies, notwithstanding that the provisions of that subparagraph do not otherwise apply to supplies by a farmer;”.

102. —Section 10 of the Principal Act is hereby amended—

(a) in subsection (3) by the addition of the following paragraph:

“(d) If, following the issue of an invoice by a taxable person in respect of a supply of goods or services, the person who issued the invoice allows a reduction or discount in the amount of the consideration due in respect of that supply, the relief referred to in paragraph (c) shall not be given until the person who issued the invoice issues the credit note required in accordance with the provisions of section 17(3)(b) in respect of that reduction or discount.”,

(b) by the addition of the following proviso to subsection (4):

“Provided that where the supply in question is a supply of immovable goods, (hereafter referred to in this proviso as ‘appropriation’), the cost to the person making that appropriation shall include an amount equal to the amount on which tax was chargeable on the supply of those goods to that person, being the last supply of those goods to that person which preceded the appropriation.”,

(c) in subsection (7)—

(i) in paragraph (c) by the insertion before “supplies” of “subject to subsection (7A),”, and

(ii) by the deletion of paragraph (d),

(d) by the insertion of the following subsection after subsection (7):

“(7A) (a) Where a supplier sells a voucher to a buyer at a discount and promises to subsequently accept that voucher at its face value in full or part payment of the price of goods purchased by a customer who was not the buyer of the voucher, and who does not normally know the actual price at which the voucher was sold by the supplier, the consideration represented by the voucher shall, subject to regulations, if any, be the sum actually received by the supplier upon the sale of the voucher.

(b) Paragraph (a) is for the purpose of giving further effect to Article 11A.1.(a) of Council Directive No. 77/388/EEC of 17 May 19771 , and shall be construed accordingly.”,

(e) in subsection (9), by the addition of the following proviso to paragraph (b):

“Provided that where a surrender or an assignment of an interest in immovable goods is a supply of immovable goods which is chargeable to tax, the open market price of such interest shall be determined as if the person who surrendered or assigned that interest were disposing of an interest in those goods which that person had created for the period between the date of the surrender or assignment and the date on which that surrendered or assigned interest would, but for its surrender or assignment, have expired.”,

and

(f) by the substitution of the following subsection for subsection (10):

“(10) In this section—

‘interest’, in relation to immovable goods, and ‘disposal’ in relation to any such interest, shall be construed in accordance with section 4 (1), provided that for the purposes of determining the open market price of a surrendered or assigned interest in accordance with the proviso to paragraph (b) of subsection (9), an interest in immovable goods shall also mean an estate or interest which, when it was created, was for a period equal to the period referred to in that proviso, regardless of the duration of that period;

‘the open market price’—

(a) in relation to the value of an interest in immovable goods which is not a freehold interest, means the price, excluding tax, which the right to receive an unencumbered rent in respect of those goods for the period of the interest would fetch on the open market at the time that that interest is disposed of, and

(b) in relation to the supply of any other goods or services or the intra-Community acquisition of goods, means the price, excluding tax, which the goods might reasonably be expected to fetch or which might reasonably be expected to be charged for the services if sold in the open market at the time of the event in question;

‘unencumbered rent’, for the purposes of valuing an interest in immovable goods, means the rent at which an interest would be let, if that interest was let on the open market free of restrictive conditions.”.

103. —Section 11 of the Principal Act is hereby amended—

(a) in subsection (1) (inserted by the Act of 1992) by the substitution in paragraph (f) of “3.3 per cent.” for “2.8 per cent.” (inserted by the Act of 1996), and

(b) in the proviso to subsection (3) (inserted by the Act of 1978) by the substitution of “25 pence” for “5 pence”.

104. —Section 12 of the Principal Act is hereby amended in paragraph (a) of subsection (1) by the insertion of the following subparagraphs after subparagraph (iiib):

“(iiic) the tax chargeable during the period, being tax for which he is liable by virtue of section 4(8), in respect of a supply of immovable goods deemed to be supplied by him:

Provided that this subparagraph shall apply only where he would be entitled to a deduction of that tax elsewhere under this subsection if the goods in question were supplied to him by another person and if he had not been deemed to have supplied them in accordance with section 4(8),

(iiid) the tax chargeable to him during the period by other taxable persons in respect of goods or services directly related to a supply of immovable goods which is deemed not to be supplied by him in accordance with section 4(8),”.

105. —Section 12A (inserted by the Act of 1978) of the Principal Act is hereby amended in subsection (1) by the substitution of “3.3 per cent.” for “2.8 per cent.” (inserted by the Act of 1996).

106. —Section 13 of the Principal Act is hereby amended—

(a) by the insertion of the following subsections after subsection (1):

“(1A) The Revenue Commissioners shall, subject to and in accordance with regulations (if any), allow the application of paragraph (b) of subsection (1) of section 11 (hereafter referred to in this section as ‘zero-rating’) to—

(a) the supply of a traveller's qualifying goods, and

(b) the supply of services by a VAT refunding agent consisting of the service of repaying the tax claimed by a traveller in relation to the supply of a traveller's qualifying goods or the procurement of the zero-rating of the supply of a traveller's qualifying goods,

where they are satisfied that the supplier of the goods or services as the case may be—

(i) has proof that the goods were exported by or on behalf of the traveller by the last day of the third month following the month in which the supply takes place,

(ii) repays, within such time limit as may be specified in regulations, any amount of tax paid by the traveller and claimed by that person in respect of goods covered by the provisions of paragraph (i),

(iii) notifies the traveller in writing of any amount (including the mark-up) charged by the supplier for procuring the repayment of the amount claimed or arranging for the zero-rating of the supply,

(iv) uses, as the exchange rate in respect of monies being repaid to a traveller in a currency other than the currency of the State, the latest selling rate recorded by the Central Bank of Ireland for the currency in question at the time of the repayment, or where there is an agreement with the Revenue Commissioners for a method to be used in determining the exchange rate, the exchange rate obtained using the said method, and

(v) has made known to the traveller such details concerning the transaction as may be specified in regulations.

(1B) Regulations may make provision for the authorisation, subject to certain conditions, of taxable persons or a class of taxable persons for the purposes of zero-rating of the supply of a traveller's qualifying goods or to operate as a VAT refunding agent in the handling of a repayment of tax on the supply of a traveller's qualifying goods and such regulations may provide for the cancellation of such authorisation and matters consequential to such cancellation.

(1C) A VAT refunding agent acting as such may, in accordance with regulations, treat the tax charged to the traveller on the supply of that traveller's qualifying goods as tax that is deductible by the agent in accordance with paragraph (a) of subsection (1) of section 12, provided that that agent fulfils the conditions set out in subsection (1A) in respect of that supply.”,

and

(b) by the insertion of the following subsections after subsection (3A):

“(3B) In this section—

‘traveller’ means a person whose domicile or habitual residence is not situated within the Community and includes a person who is normally resident in the Community but who, at the time of the supply of the goods intends to take up residence outside the Community in the near future and for a period of at least 12 consecutive months;

‘traveller's qualifying goods’ means goods, other than goods transported by the traveller for the equipping, fuelling and provisioning of pleasure boats, private aircraft or other means of transport for private use, which are supplied within the State to a traveller and which are exported by or on behalf of that traveller by the last day of the third month following the month in which the supply takes place;

‘VAT refunding agent’ means a person who supplies services which consist of the procurement of a zero-rating or repayment of tax in relation to supplies of a traveller's qualifying goods.

(3C) For the purposes of this section, and subject to the direction and control of the Revenue Commissioners, any power, function or duty conferred or imposed on them may be exercised or performed on their behalf by an officer of the Revenue Commissioners.”.

107. —Section 19 of the Principal Act is hereby amended—

(a) by the insertion of the following subsection after subsection (2):

“(2A) Where a payment is made prior to the 1st day of July, 1997, in respect of a telecommunications service which is to be supplied by a person in the course or furtherance of business from outside the State on or after that date and the place of supply of that service is deemed by virtue of paragraph (e) of subsection (6) of section 5 to be, at the time of its supply, the State, then that payment shall be deemed, for the purposes of subsection (2), to be made on that date.”,

(b) by the deletion of the proviso (inserted by the Act of 1993) to paragraph (a) of subsection (3), and

(c) by the deletion of subsection (6) (inserted by the Act of 1993).

108. —Section 20 of the Principal Act is hereby amended by the deletion of the proviso to subsection (1) (inserted by the Act of 1993).

109. —Section 25 (1) of the Principal Act is hereby amended by the insertion of the following paragraph after paragraph (ac):

“(ad) the refusal of an application for authorisation to operate as a VAT refunding agent (within the meaning assigned by section 13 (3B)) or the cancellation of any such authorisation,”.

110. —The First Schedule (inserted by the Act of 1978) to the Principal Act is hereby amended—

(a) in paragraph (ii) by the insertion before “school” of “children's or young people's education,”, and

(b) in paragraph (vi) by the insertion after “profit” of the following:

“and the supply of services for the protection or care of children and young persons, and the provision of goods closely related thereto, provided by persons whose activities may be regulated by regulations made under Part VII of the Child Care Act, 1991 ;”.

111. —The Second Schedule to the Principal Act is hereby amended—

(a) in paragraph (i):

(i) by the substitution in subparagraph (a) of the following clause for clause (I):

“(I) outside the Community:

Provided that this subparagraph shall not apply to a supply of goods to a traveller (within the meaning assigned by section 13 (3B)) which such traveller exports on behalf of the supplier and such supply shall be deemed to be a supply of the type referred to in subparagraph (f), or”,

and

(ii) by the addition of the following subparagraph after subparagraph (e):

“(f) which are a traveller's qualifying goods (within the meaning assigned by subsection (3B) of section 13), provided that the provisions of subsection (1A) of that section and regulations (if any) made thereunder are complied with;”,

and

(b) by the addition of the following subparagraph after subparagraph (via):

“(vib) the supply of services in procuring a repayment of tax due on the supply of a traveller's qualifying goods (within the meaning assigned by subsection (3B) of section 13) or the application of the provisions of subparagraph (i) (f) of this Schedule to that supply of goods, provided that the provisions of subsection (1A) of that section and regulations (if any) made thereunder are complied with;”.

112. —The Fourth Schedule to the Principal Act is hereby amended by the insertion of the following paragraph after paragraph (iii):

“(iiia) telecommunications services;”.

113. —The Sixth Schedule (inserted by the Act of 1992) to the Principal Act is hereby amended by the addition of the following paragraph after paragraph (xi):

“(xia) nursery or garden centre stock consisting of live plants, live trees, live shrubs, bulbs, roots and the like, not being of a type specified in paragraph (xv) of the Second Schedule, and cut flowers and ornamental foliage not being artificial or dried flowers or foliage;”.

114. —The European Communities (Value-Added Tax) Regulations, 1993 (S.I. No. 345 of 1993), and the Value-Added Tax (Threshold for Advance Payment) (Amendment) Order, 1994 (S.I. No. 342 of 1994), shall be deemed to have been revoked with effect from the 7th day of November, 1996.

¹O.J. No. L145 of 13 June 1977, p. 1.