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VAT rate, intra EU Royalties on IP

Sorry if this has been covered before but I am having trouble pinning down a precise answer.  HMRC's web site is, as always, totally useless on the subject!

Other posts state that VAT on IP is VATable.  However if a UK company charges a company in another EU state royalties on patented rights is it Zero rated or Reverse charge?

Any advice acknowledged and appreciated.


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20th Dec 2012 13:27

The supply is a B2B supply of services and place of supply is where recipient is established so Outside the Scope of UK VAT and subject to reverese charge in Member State of receipt.

Thanks (1)
20th Dec 2012 15:50

Thanks Shaun

I have got conflicting information about the status.  If this is all the service provider does and, as you say, the supplies are 'outside the scope' the company can presumably not reclaim any input VAT?!

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20th Dec 2012 16:04

Even though Outside the Scope - the supply is treated as Outside the Scope with credit, thereby allowing Input VAT recovery. There are two types of Outside the Scope supplies - those with credit where the Place of Supply is generally somewhere else and those without credit where the supply is precluded from VAT.

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20th Dec 2012 16:18


Thank you Shaun

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28th Apr 2013 15:49

Foreign VAT treatment of book royalties from other member states

Related question: A small UK book publishing company (t/o below VAT threshold so not registered for VAT) receives small sums for book advances and royalties from various other EU states. (Sometimes invoices have to be raised, but not as a rule.) Will the UK company now be required by other member states to register in each country where presumably the place of supply is now deemed to be the relevant licensee's state? VAT on (IP) book royalty advances and licences may be 'outside the scope' in UK, but does that definition apply in the other member states (and they may have a zero registration threshold)? Any views on this would be very welcome.

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