VAT and training services in Ireland
The VAT rules relating to training services changed in Finance Act 2015. The new rules commenced on 21 December 2015.
Previously there was an exemption for certain training services. The rules have been fundamentally changed.
Exemption for VAT on Training Services
The exemption from VAT for training services is now restricted to:
A Recognised bodies (as defined in legislation) who provide:
Children’s or young people’s education, school or university education;
Vocational training; or
Including the supply of goods and services incidental thereto (excluding research services)
B Instruction in driving mechanically propelled road vehicles designed or constructed for carriage of (i) 1.15 tonne of goods or more; or (ii) more than 9 persons(including the driver).
C Tuition given privately by teachers and covering school or university education.
To be exempt from VAT under category A, a training provider will need to fall into one of the categories of “recognised body”.
Are you a Recognised Body?
A “recognised body” is defined as
A public body; or
A recognised body (within Education Act 1998);
An education or training provider (as defined in Education and Training Boards Act 2013) to which section 22 of the Act applies (i.e. contracted by a board to do certain work);
A body in receipt of moneys advanced under section 21 of the Further Education and Training Act 2013;
A body providing training for initial or continued access to a regulated profession (within meaning of Recognition of Professional Qualifications (Directive 2005/36//EC) Regulations 2008 (S.I. No. 139 of 2008);
A body providing a course leading to an award (recognised within the National Framework of Qualifications);
A body included on a list published by Minister for Justice and Equality to provide courses acceptable for granting an immigration permission;
A body providing a course leading to an award by an approved college (section 473A Taxes Consolidation Act 1997);
A provider of a programme of education and training (as defined in Qualifications and Quality Assurance (Education and Training) Act 2012) which is validated under section 45 of the Act;
A body providing education to children or young persons which if provided by a recognised school (defined section 10 Education Act 1998) would be the curriculum prescribed under section 30 of that Act.
If your business does not fall within the definition then your activities are no longer exempt from VAT unless you fall within category B or C.
Based on the definition of a recognised body it is possible that some training activities of a business will be liable to VAT while other training activities will be remain exempt.
There is an obligation to register for VAT once the turnover of a business providing services exceeds (or is likely to exceed in a 12 month period) €37,500. See Revenue Guidance. A business can also elect to register and charge VAT.
Guidance is awaited from Revenue on how trainers should apply this new legislation.
Have a question on taxation? Please contact us for a consultation.
The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice.
No liability whatsoever is accepted by M. McLoughlin & Co. for any action taken in reliance on the information in this article
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