The purpose of a specific place of supply rule on services connected with immovable property is to ensure Value Added Tax (VAT) occurs at the place of consumption of the service.
Generally, if the supply of services is connected with immovable property, or is the grant of a right to use the property, the place of supply is where the property is located.
This rule applies regardless of whether the service is supplied to a business customer (B2B) or to a final consumer (B2C).
For VAT purposes generally, immovable property means land and any buildings or fixtures attached to the land.
The specific rule concerning the place of supply of services relating to immovable property only applies where the service supplied is directly related to a specific property. It does not apply if the service in question only has an indirect connection with the property, or if the property related service is only an incidental component of a more comprehensive supply of services.
Services shall be regarded as having a sufficiently direct connection with immovable property in the following cases:
- where they are derived from an immovable property and that property makes up a constituent element of the service and is central to, and essential for, the services supplied or
- where they are provided to, or directed towards, an immovable property, having as their object the legal or physical alteration of that property.
A list of specific services has been set out in EU Regulations as being considered connected and not connected to immovable property. Where a service is not included in the lists then you apply the test set out above to determine whether the service is connected with immovable property.
Construction operations including construction, demolition, conversion, reconstruction, alteration, enlargement, repairs or maintenance of a building or civil engineering development are taxable where the immovable property is located.
Services directly connected with the pre-construction, construction and/or the development of immovable goods, where the nature of the services requires the suppliers to be involved in actual on-site activities, are also regarded as construction operations.
If the place of supply is Ireland, the rate of VAT charged will depend on the nature of the service supplied.