The state is set to lose millions in VAT revenue following a Supreme Court ruling that cable television company NTL should pay the lower VAT rate of 13.5% on fees for the supply of connections.
Since 1989, the Revenue has argued that NTL services were liable to the 21% VAT rate on connections. But the Supreme Court has ruled that VAT should be charged only at the lower rate of 13.5%.
It is understood that the result could substantially reduce the amount of VAT the state can collect for connection to such services.
Revenue's decision to charge VAT at 21% was originally challenged in 1989 by Cablelink, before NTL took the case over. Revenue appealed the decision to the Supreme Court after NTL won its case in the Appeal Commissioners and in the High Court. NTL had not been charging the 21% rate so there will be no rebate for consumers.
NTL said it was delighted with the decision, but was still analysing the details of the judgment and would not be making any further comment.
Eircom, which has been charging 21%, also welcomed the decision, and said it would be looking at how the judgment might apply to its services.
A spokesperson for the ESB said that the company had always charged the lower 13.5% rate on connections so the ruling would have no impact on it or its customers.
Revenue said it was still studying the implications of the lengthy judgment.
A spokesperson said that if companies considered that their services or part of their services should now be charged at the lower rate of VAT as a result of this case, they should contact their local inspector of taxes.
