Vat on services to EU and outside EU

[vat question]

I have clients in EU and outside EU. And I provide consultancy services to these clients. I have limited VAT knowledge and I always assumed all services to outside UK should not be charged VAT – is that correct?

[vatconsultant]

(i) VAT ON SERVICES TO EU
The VAT rules are that place of taxation (for VAT purposes) is determined by (i) where the services are supplied and (ii) status of the customer receiving the service i.e. whether a business or consumer.

The place of supply for business to business transactions (B2B) is the place where the business customer ‘belongs’. Hence services to EU businesses, the place of supply is where the business customer ‘belongs’, hence VAT should not be charged to all EU businesses.

The place of supply for business to consumer transactions (B2C) is the place where the supplier ‘belongs’ irrespective of the location of their customer. Hence the place of supply for services to EU customers is UK and VAT should be applied regardless of the location of the customer. Please note B2B (Business-to-business) means commercial transactions between businesses and B2C (business-to-consumer) means transactions between a business to natural persons/private individuals. Also note services to EU businesses that are not VAT registered are counted as a consumer.

You can look at the above in detail from these links: https://www.taxadvisermagazine.com/article/location-location & https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a

The link https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec12 – paragraph 12.2 list services that are excluded from the above general rules. These services when provided by a UK business to any customer in EU, VAT should NOT be charged.

Therefore, my view is that if the client is a private individual/natural person and services is not covered in the exemptions list link above, you should already be charging VAT irrespective of the location of the clients.

(ii) VAT ON SERVICES TO OUTISDE EU
VAT services to outside EU are outside the scope of VAT and hence no VAT is charged. However, input VAT relating to these services is recoverable. There is no B2B or B2C with respect to outside EU services.

[rainbow123]

VAT information and calculations can get very difficult and complicated when you are trying to do it all manually. There is a useful software that is designed specifically for cross border selling and EU VAT. Cross Border VAT software, apparently are one of the most affordable software packages out there currently.

I am also a user for my amazon channel and it helped me save £1000’s compared to what I was planning to pay with other software packages.

[VAT-adviser]

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[Author]

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