Hi All,
perhaps you could help with the VAT query below:
We have a local branch in France which regularly carries out jobs for local French businesses (we only do B2B).
As part of an agreement with one of our customers, we invoice all the work carried out for them in Europe from the UK.
In order to record the revenue locally our French branch is invoicing us but applying VAT at 20%. We were convinced they should be using the reverse charge mechanism? So no VAT in their invoices when generating the intercompany invoice.
The French claim that as the work has been carried out by them to a business in France that VAT should be charged in the IC invoice.
Can someone help? VAT or not VAT? And if the French have to include VAT on the IC invoice can we recover the amount in the UK?
Very confused?!?
Thanks,
V
Replies (12)
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Yes, I think since you have a permanent establishment in France and transaction is between 2 french companies. TVA should apply assuming you above the turnover threshold and need to register for TVA.
What type of services does your French branch provide to French customers? Or is it supplying goods to them?
I am no VAT expert (I wish one of the regulars would come along and give a definitive answer), but it seems to me that Taxwizard is correct.
A fixed establishment in France is the entity most closely associated with the supply of B2B services to a recipient in France. I am not sure why your French branch is raising an internal invoice, but I think that whatever invoice it does raise for the service is subject to French TVA, regardless of the location of the "customer" to whom the invoice is addressed.
Is the French "branch" part of the same legal entity? or is it a different legal entity?
The information provided makes no sense.
So I am "very confused?!?" too.
Ah, so the "branch" is not a branch. It is a separate entity; a parent, subsidiary or sister company.
Yes. They should invoice you without TVA, and you then reverse charge.
Then you invoice the French customer and they reverse charge in France, and voila! the French Authorities momentarily get their TVA only to see it momentarily recovered by the end customer.
The place of supply of services seldom has anything to do with where the services are actually performed.
Has anybody noticed how these fundamental snippets of missing information can change the analysis significantly?
In my experience, the French are incapable of being educated.
My only suggestion would be to offer them the following link in place of your own:
http://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/whe...
Under the heading "Les prestations de services" (supplies of services), you will find a section "Services d'enterprise à enterprise" (business to business services), which deals with B2B the general rule. Example 19 (as in the English version) is the example you want.