UK Ltd company – billing French company for services (in EU) – VAT or Not

Forum Categories INTERNATIONAL VAT ON CROSS-BORDER TRANSACTIONS UK Ltd company – billing French company for services (in EU) – VAT or Not

  • This topic is empty.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
  • #55740

    We are a springwire stockholder in UK – and we have worked closely with a French company similar to us (but bigger) for many years.

    Pre Brexit – we intertraded happily – I would purchase stock from them , import to UK and then either sell in UK or re-export to customers around EU.

    Post Brexit – the whole thing is a nightmare with a minimum £ 100 extra per pallet in each direction to cover customs documentation (plus extra paperwork)and everything is taking a week longer.  They are helping us ship some orders direct to EU customers using our documents.

    We are contemplating a situation where we let our French partner sell direct to our existing customers – and we will bill them a monthly service charge . 
    We would keep the customer relationships for continuity – but they would place future orders directly with France.

    So a fixed monthly commission to essentially let them take over our EU based customers (fixed for a period of say 5 years to give us some security) .
    Like a slow motion purchase of our EU sales…

    But does that monthly invoice from us carry any VAT implications (for us or our French partner)?
    Since we are providing services in the EU . I would assume our invoice can be with zero VAT?

    Trevor S

    This would work.  From your perspective – the place of supply of your services is regarded as France, so your charge falls outside the scope of UK VAT.  The French company would have to account for VAT using the reverse charge.  They would calculate French VAT on your invoices based on their VAT rate, and pay it over to their tax authorities.  But (on the same French VAT return) they could also reclaim that VAT as an input to their business activities – so no overall VAT cost to them.

    It’s broadly similar to what you would have done pre-Brexit when they sold goods to you.  They wouldn’t have charged you French VAT and you would have calculated UK VAT, paying it to and reclaiming it from HMRC on the same UK VAT return.

Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.