Ireland – Sharing Economy and VAT Compliance (Uber case) 

Uber has been among the most profitable and influential digital platforms in the last decade. It belongs to the sharing economy platform group. Uber, being one of the most internationally recognized digital platforms in this sector, has significantly impacted the development of the sharing economy. 

This level of relevance, driven by continuous growth and expansion of its portfolio of services, undoubtedly influences the taxation models shaped around these types of platforms worldwide. 

The relevance of Uber and its related facilitation services has been one of the most important topics discussed in different business sectors in Ireland, most notably between taxi drivers and other digital platforms competing with Uber in the country. 

There is at least an equally important discussion on the topic from the perspective of the Revenue Authority, which is trying to decipher where the VAT liability belongs and how to pursue “negligence” if there is one.

Current situation 

Legal – Tax Landscape 

Uber has been operating in Ireland for the last four to five years. It provides facilitation services connecting suppliers (taxi drivers) and buyers (end customers). Uber charges its users a commission (fee) for these facilitation services (booking services) made through its platform. However, as the “publicly shared” sources state, Uber hasn’t charged local VAT on its commissions. 

Practically speaking, Uber hasn’t levied Irish VAT on providing booking services to its registered users (Irish taxi drivers). In its statement, Uber states that it is not obligated to levy local VAT on these services. 

Uber hasn’t pursued the path of acting as a deemed supplier for this type of VAT liability and has left its users (taxi drivers) to confront this responsibility adequately. 

Taxi drivers, residents of Ireland, who provide transport passenger services and transfer connected baggage, aren’t obliged to charge VAT on these types of services. Following this rule, they are primarily VAT-exempt economic operators. 

This means that they cannot charge Irish VAT on the facilitation services provided by the digital platform if they have not previously registered for VAT. 

The EU VAT law states that the general rule for the place of supply for services within a B2B transaction is where the buyer has its place of business, is established, or is his residence. In this case, it means that the obligation belongs to taxi drivers. 

This Uber platform has its HQ in Amsterdam, and as such, it is “defined” as a taxable person outside Ireland. Following the general place of supply rule applicable in the EU, Uber is ”outside the tax liability in Ireland for this type of service provision”.

Suppose the letter of the law is followed, under these circumstances. In that case, the taxi drivers “should” be responsible for charging, collecting, and remitting the VAT on the booking services facilitated by the platform. 

The interpretation of the law and connected regulation isn’t set in stone when it comes to “ultimate” VAT responsibility and determining who should bear the duty of charging and remitting tax on these types of services. 

This is mainly because we are speaking about tax regulations continuously being developed, implemented, and revised to accommodate the needs of the modern platform economy. 

However, other digital platforms, like Bolt and FreeNow, act as deemed suppliers, collecting VAT on their commission and reporting the owed tax to the Revenue Authority. 

The Revenue Authority’s response to this discussion and “case” matters remain to be seen in the upcoming months. Currently, the responsibility is more connected to the taxi drivers (platform users). 

Uber, one of the most prominent representatives of the sharing economy platforms, is experiencing some pressure from the taxi sector in Ireland. Currently, the platform counts around 11,000 users (taxi drivers) who have adhered to it and are using its facilitation services. 

There is an ongoing discussion about which party is responsible for the VAT liability on the commission charged by the platform to its users. 

How this “case” is handled could, to some extent, shape the course of the tax liability for the country’s sharing economy platform operators.