Ireland:
Funding Irish Property Acquisitions – VAT On Legal Services
21 July 2017
Maples Group
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VAT on legal fees is a continual headache for many property
companies. Typically Irish borrowers will have to fund the lending
bank's legal fees. Where VAT is charged to the bank, the
borrower cannot recover it. In Ireland, there has been a practice
of the bank's lawyers applying VAT to their fees, because they
deem the service to relate to Irish property.
However, recent guidance from the EU could be helpful. It
confirms that a non-Irish lender should not be subject to Irish VAT
on their legal fees. Instead, the rate of VAT (if any) which
applies is dependent upon where the lender is established for VAT
purposes. As most VAT rates are lower than the Irish rate, this
should lead to a lower overall cost for the borrower. Non-Irish
lenders and borrowers who may be required to pay the lender's
legal fees should note the helpful EU position in this regard.
Explanatory
notes on EU VAT place of supply rules on services connected with
immovable property that enter into force in 2017
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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