Value Added Tax Consolidation Act 2010 section 49

Contract work

Section 49 sets out the rate of VAT chargeable on contract work, being the processing of another person's goods, and provides that the applicable rate is determined by the goods handed over rather than the service performed.

• The rate of VAT on contract work is the rate that would apply if the supply were a supply of the goods being handed over by the contractor to the customer.
• This means the standard rate applies where the finished goods are standard-rated, the reduced rate where the goods are reduced-rated, and the zero rate where the goods are zero-rated.
• The rule does not apply to the processing of movable goods temporarily brought into the EU for that purpose, which is zero-rated under Schedule 2, paragraph 3(4).
• VAT is not deductible on the procurement of contract work where the goods handed over are themselves goods on which VAT is non-deductible.