Tax Appeals Commission determination 16TACD2020 regarding VAT - Telecommunications Services, 2020

Administrative Decision Number16TACD2020
Date06 December 2019
Subject MatterVAT - Telecommunications Services
RespondentREVENUE COMMISSIONERS
16TACD2020
APPELLANT
Appellant
V
REVENUE COMMISSIONERS
Respondent
DETERMINATION
Introduction
1. This appeal concerns four consolidated appeals against the following determinations
and assessments made by the Respondents:
(i) Non-EU Roaming Charges
Section 104 of the Value Added Tax Consolidation Act 2010 (the “VATCA”) provides
for a refund of VAT where ‘telephone cards’ are used outside of the EU. The
Respondent takes no issue with the Appellant making a claim for a refund of VAT
where the claim relates to ‘pre-pay’ customers accessing international roaming
outside the EU. However, the Respondent asserts that such a claim may not be made
in respect of ‘bill-pay’ customers. Furthermore, it is also necessary to determine
whether the distinction between the ‘pre-pay’ and ‘bill-pay’ customers constitutes a
breach of fiscal neutrality to the extent that the Appellant is entitled to a refund of
VAT also in respect of bill-pay customers. The tax at issue in this aspect of the appeal
is €2,230,048;
(ii) Cancellation Charges
This issue relates to cancellation fees charged by the Appellant to its customer
where the customer terminates a fixed term contract prior to the end of contract
date and whether the cancellation fee is subject to VAT. The tax at issue in this
aspect of the appeal is €1,680,083,
(iii) Bill Pay Broadband
This issue relates to arrangements whereby the Appellant’s customer enters into a
contract for access to a gigabyte of data for the sum Amount Redacted per month.
The issue
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for consideration relates to the customers who do not exhaust their entire
data allowance in any given month and whether the amount of consideration
is proportionate to the unused data remains subject to VAT. The tax at issue
in this aspect of the appeal is €16,034,473, and
(iv) Time Limits
This issue relates to whether the limitation periods for a reclaim of VAT in the sum of
€409,237 for the period of March 2012 to February 2013 are outside the time-limit
provided for in VATCA, section 99. The issue for determination is whether VATCA,
section 99 breaches the EU law principle of equivalence.
Background
2. The Appellant is a telecommunications and internet service provider operating in Ireland
as a subsidiary of Parent Name Redacted, operating under a Global Brand Redacted and
has been operating 3G and 4G services in the State since Date Redacted.
3. The Appellant’s commercial arrangements with its customers can be classified as falling
into two categories:
(a) “pay as they go” or “pre-pay”, which requires customers to pre-pay for a
specific amount of credit; and
(b) “‘bill-pay’” where customers are billed at the start of each month for the fixed
sum due for that month (and for the out-of-bundle use for the previous month).
The Appellant supplies telecommunications services to both its pre-pay and bill-pay
customers, whilst they are physically inside and outside of the EU. When one of the
Appellant’s customers consumes the services in another jurisdiction and referred to as
“roaming”, although customers are in a position to avail of roaming “bundles” which
allow them to avail of telecommunications services at a lower rate when roaming
Legislation
4. The definition of a “taxable person” is contained in section 2 VATCA as meaning “a
person who independently carries on a business in the Community or elsewhere”.
5. Section 2 VATCA also provides the following definitions:
“Telecommunication 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, and includes
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(a) the related transfer or assignment of the right to use capacity for such
transmission, emission or reception, and
(b) the provision of access to global information networks;”
“telephone card” means a card, or a means other than money -
(a) that confers a right to access a telecommunications service and, in cases
where the supplier of the telecommunications service so agrees with another
supplier (in this definition referred to as a “contracted third party supplier”), a
right to receive other services or goods from that contracted third party
supplier, and
(b) that, when the card or other means is supplied to a person other than for the
purpose of resale, entitles the supplier to a consideration for the supply under
circumstances that preclude the user of the card or means from being liable
for any further charge for access to the telecommunications service or for the
receipt of services or goods from a contracted third party supplier;”
6. The charge to VAT is pursuant to section 3 VATCA which provides:
“Except as expressly otherwise provided by this Act, a tax called value-added tax is,
subject to and in accordance with this Act and regulations, chargeable, leviable and
payable on the following transactions:
(c) the supply for consideration of services by a taxable person acting in that
capacity when the place of supply is the State;”
8. The general rules regarding the place of supply are set out by section 34 VATCA and
provide as follows:
The following rules apply to determine the place where, for the purposes of this Act,
services are supplied:
………
(b) except as provided by paragraphs (c) to (n), the place of supply of services to
a non-taxable person is
(i) subject to subparagraph (ii), the place where the supplier’s business is
established,”
…..

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