Article:

Depositary Services and Global Custody Services – VAT Update

16 May 2023

The Irish Revenue Commissioners published a Tax and Duty Manual entitled VAT treatment of depositary services and global custody services” in May 2022.  This Manual has provoked much debate in the industry since its publication twelve months ago.

In summary, please note the following:

  • The VAT treatment of depositary services and global custody services is complex and requires a thorough examination, on a case by case basis, of the exact nature of the services provided.
  • Where the “oversight” function is the only service provided, the supply is taxable at the standard rate (currently 23%).
  • Where a composite supply is provided and:
    • the “oversight” function is the principal service provided, the composite supply is taxable at the standard rate (currently 23%).
    • the “global custody” function is the principal service provided, the composite supply is VAT exempt.
  • Where the supply comprises separate supplies of “oversight” services and “global custody” services, the former will be taxable at the standard rate (currently 23%), and latter will be VAT exempt. 

Comment

As this issue is extremely topical and as VAT is a transactional based tax where errors can lead to substantial VAT liabilities, it is important that all providers of such services review their current VAT treatment.       

We are here to help and please get in touch with us if you have any queries on the above mentioned VAT treatment or you wish to discuss the practical implications of this in more detail. 

Philip Nolan, Partner, VAT ([email protected])

Ivor Feerick, Partner ([email protected])