Dealing with transactions made between different countries can be a minefield of VAT complexity raising questions such as:
- Should I add VAT to my invoice?
- Who is responsible for accounting for the VAT, me or my customer?
- Do I have to account for VAT on services received?
- Do I have any additional reporting responsibilities as a result of supplies made?
- Have I a liability to register for VAT in the country in which my customer is based?
You may have to account for UK VAT if you receive services from outside the UK
Place of supply rules differ depending on whether your customer is a business or an individual
This complexity has increased since the UK left the EU on 31 December 2020. You can read more about this on our Brexit page .
The answers to these questions are dependent on a number of factors such as:
- the exact nature of the service.
- where the customer and supplier ‘belong’, which can be difficult to judge
- whether customers are business customers or private individuals?
- whether consideration has to be given as to where the services are ‘used and enjoyed’.
- whether all the necessary evidence been obtained to justify not charging VAT
Certain specified services related to finance and insurance receive a different VAT recovery treatment when they are made outside the UK. This means that some businesses that would otherwise recover no VAT when making these supplies solely within the UK may be entitled to recover VAT on costs if the supplies are made outside the UK.
The method used to calculate the recovery of VAT costs can vary and may lead to tailored arrangements that need to be agreed with HMRC prior to their implementation.
Often UK businesses incur local VAT on their business trips to other member states. This VAT is not recoverable on a UK VAT return but there are mechanisms by which it can be recovered.
Are you certain you are dealing with VAT on EU and international transactions correctly; if not contact Constable VAT for advice.
For further advice or help, please get in touch.