Michael McGrath (Cork South Central, Fianna Fail)
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209. To ask the Minister for Finance the reason the 2015 place of supply VAT changes in the budget 2015 will only bring in €100 million in 2015 but will bring in €125 million in 2017 and €150 million in 2019; if any glide path arrangements were made with any companies to allow them bring in the new VAT rate over a period of time; if he will identify these companies; if any arrangements have been made with the UK Exchequer in regard to these changes; and if he is concerned that there is likely to be a big cost increase in Sky television subscriptions due to the VAT change which means the company is now paying VAT here rather than paying a sheltered rate previously to the British Exchequer. [43077/14]

Michael Noonan (Limerick City, Fine Gael)
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Cross-border EU telecommunications, broadcasting and electronically supplied services are currently charged to VAT in the Member State of the supplier.  From 1 January 2015 these services will be charged to VAT in the Member State of the consumer.  The VAT changes mean that Member States will lose VAT revenue in respect of existing outward sales to consumers in other Member States but will gain revenue in respect of inward sales to their own consumers of these services.  Ireland is set to gain from the VAT changes because we are a net receipt of these services from other Member States.  The majority of electronic supplies in Europe, such as online music and books, are made from Luxembourg, which from 2015 will be subject to Irish VAT.  In addition, Irish consumers receive television broadcasting services from the UK, which will also be subject to Irish and not UK VAT from 2015.  The new rules will level the playing field in Europe by removing the incentive for companies to locate in low VAT rate jurisdictions, such as Luxembourg, which should enhance Ireland's attractiveness for e-services companies in particular.

It is estimated that the place of supply changes will lead to a net gain to Ireland in VAT revenues of €100 million in 2015 and 2016, €125 million in 2017 and 2018 and €150 million in 2019 and subsequent years.  The VAT estimate is graduated over four years because it was agreed at EU level during negotiations on the place of supply changes to include transitional measures.  The agreed transition provides that Member States can retain 30% of the VAT revenues on outward supplies of electronic services in 2015 and 2016; 15% of revenues in 2017 and 2018, after which the full VAT revenue will accrue to the consumer's Member State. The transitional arrangements does not relate to any business, but to the allocation of VAT receipts between the Member States of consumption and supply.

In relation to your query regarding a specific television broadcasting company, it is not possible for me to discuss the tax affairs of individual businesses.

With regard to the impact on the consumer of the place of supply changes, the new arrangement could result in an increase in the cost of services for Irish consumers, where the cost of the VAT change is passed on by the supplier. For example, the VAT charged on broadcasting and electronically supplied services from the UK will increase from the UK standard VAT rate of 20% to the Irish standard VAT rate of 23%, while the VAT on electronic services from Luxembourg will increase from their super-reduced rate of 3% to Ireland's 23% standard rate. However, the cost of the additional VAT may not always be forwarded onto the consumer; where businesses operate an individual pricing system across the EU.