Ireland: Uber Drivers May Be Liable for VAT on Commissions

Uber drivers in Ireland were taken aback by the news that they might be liable for VAT on the commissions paid to Uber. The revelation that Uber, unlike some competitors, did not charge and pay VAT on commissions to the Revenue Agency (Revenue) left Uber drivers in a challenging position, potentially the ones Revenue might pursue for due VAT.

VAT Liability of Uber Drivers

Two other transportation companies that operate similarly to Uber are Bolt and FreeNow. However, Bolt and FreeNow charge drivers fees on the drives paid by end users and collect and remit VAT to the Revenue. On the other hand, Uber did not do this, jeopardizing around 11,000 Uber drivers, who now do not know if and when the tax authorities will ask them to pay the VAT owed.

Regarding this issue, Uber stated that although there is no VAT on fees for transporting passengers in Ireland, services that they provide to drivers are subject to VAT, and all drivers should be registered for VAT. Since Uber does not deal with this on drivers' behalf, all drivers in Ireland should have completed the registration process independently.

Based on the information revealed by Revenue representatives, it seems unlikely that they will pursue the VAT. Still, they will monitor tax returns that Uber and Uber's drivers filed to investigate compliance further. One possible outcome for drivers could be that they will not receive tax clearance certificates and, therefore, cannot renew public service licenses.

Regarding the VAT due, Uber drivers' owes to Revenue are estimated to be small, providing some reassurance about the potential financial impact. 

Conclusion

This situation seems like an unpleasant experience for all Uber drivers, and the question remains open: Why did Uber not charge VAT in Ireland, thus reducing the administrative burden for them? Furthermore, from a Revenue perspective, it might be easier to collect VAT from Uber as a single entity and not deal with thousands of VAT returns submitted by Uber drivers.

It is still unclear whether the Revenue will collect VAT from drivers or if there will be another solution to the problem.

Source: Irish Times