VAT Information

Does the recent CJEU’s (Court of Justice of the European Union) ruling affect you?

Following the CJEU ruling Revenue have advised Transport Infrastructure Ireland (TII) that VAT should not be applied to tolls levied by TII, it being a state agency.

This means that, with effect from 1st April 2017 TII will cease to include VAT as part of the tolls for journeys on the M50 and Dublin Tunnel occurring as and from that date.

The net effect of this is that the position, as regards VAT on such tolls, will return to as it was before July 2010.

History of VAT on M50 and Dublin tunnel tolls

In July 2010, the Revenue required that VAT be imposed on M50 and Dublin Tunnel tolls. Transport Infrastructure Ireland (TII) appealed the ruling and, while the appeal went ahead, decided to protect their customers on the basis that if they won, the pre-July 2010 position would prevail. TII’s decision meant that for the relevant period its net receipts in respect of the tolls were effectively reduced by nearly 20% as it has been absorbing the cost of the VAT (at 23%) ever since the Revenue instruction and pending the conclusion of the appeal process.

In other words, TII calculated the VAT payable by reference to existing toll rates, on the basis of the Revenue instruction and paid it to Revenue from its toll revenue.

Those business users who are engaged in VATable activities could include as a VAT input credit the VAT portion of the toll (which was being paid by TII). Doing this meant that, at that time, for those business users, the net cost of the tolls (i.e., after receipt of the input credit) was reduced.

Invoices/receipts issues in connection with toll journeys on the M50 and Dublin Tunnel occurring on or after 1st April 2017 will no longer show VAT. Those business customers will no longer be able to seek input credits for those roads because VAT will not be applied. This will affect all tag customers who are business customers, irrespective of your tag provider.

This change in the position on VAT on tolls will have no impact on eFlow or Dublin Tunnel private customers.

If you have any questions in relation to the impact of this on you, you should contact your tax adviser or Revenue.

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