Value Added Tax Consolidation Act 2010 section 38

Determination that open market value applies

Section 38 empowers Revenue to substitute the open market value as the taxable amount for supplies between connected persons where the actual consideration does not reflect that open market value.

• Revenue may determine that VAT is chargeable on the open market value of a supply rather than the actual price charged, where the supplier and recipient are connected by financial or legal ties or where one exercises control over the other.
• A determination may be made where the price charged is below open market value and the recipient has no entitlement, or only a partial entitlement, to deduct VAT, or is a flat-rate farmer.
• A determination may also be made where the price is below open market value on an exempt supply, or above open market value, and the supplier carries on non-deductible activities or is a flat-rate farmer.
• The value determined by Revenue is deemed to be the correct value for all VAT purposes, and the determination may be made by an inspector of taxes or another authorised Revenue officer.