Charging VAT to EU Company

[RICHARD JOLLY]

We are a UK VAT registered company.  We have supplied website design, video production of online recordings.  All work done from our office as a service.  Our client is in Dublin. I am waiting to hear if  whether they are VAT registered. Please could you tell me if I should charge them VAT.  Many thanks.

[VAT-adviser]

Hi Richard, im here to help. 

The supply of website design, video production of online recordings including services which are delivered over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, are considered ‘electronically supplied services’ for VAT purposes.

The supply of electronically supplied services is a ‘taxable’ supply subject to VAT if the place of supply is in the UK and is outside the scope of VAT if the place of supply is outside the UK and EU.

The place of supply for electronically supplied services is where the customer uses or consumes the digital which is normally the country the customer resides or has a permanent address. Therefore, a good record keeping system should be in place to determine the location of the consumer.

The place of supply for electronically supplied services to individuals is determined as follows:

(i) resident in the UK means the place of supply is the UK (UK standard rate of 20% applies)
(ii) resident in the EU, means the place of supply is the UK (VAT rate of the customer’s EU member state should apply)
(iii) resident outside EU, the place of supply is outside EU (no UK/EU VAT is charged)

The place of supply for electronically supplied services to individuals is determined as follows:

(i) resident in the UK means the place of supply is the UK (UK standard rate of 20% applies)
(ii) resident in the EU, means the place of supply is the UK (VAT rate of the customer’s EU member state should apply)
(iii) resident outside EU, the place of supply is outside EU (no UK/EU VAT is charged)

The place of supply for electronically supplied services to businesses ie B2B to:

– business EU country, place of supply is the EU country, therefore zero-rated.
– business resident outside EU, the place of supply is outside EU (no UK/EU VAT is charged)

The key issue is to: 

• check if the services/products qualify as electronically supplied services
• check if your customers are individuals or businesses
• know where your customers are resident

[Author]

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