Dear all,
I have a UK based client who supplied a service to a Germany based VAT exempt company.
Am I correct in assuming that the place of supply rules don't matter in this case and that simply UK rate of VAT at 20% should be charged?
Thanks
Replies (3)
Please login or register to join the discussion.
Incorrect - probably
You don't say what the nature of the services are, but if they fall within the general rule, the place of supply is Germany. The German client may have to account for VAT under reverse charge rule (without being able to recover it).
VAT - Reverse charge
Normally both your client's VAT no AND the customer's VAT no. should appear on the invoice, the service amount shown, zero in the VAT box and thus the Nett & Gross will be the same.
One of the following forms of words should be used
'Reverse charge supply'.'This supply is subject to the reverse charge'.'Subject to reverse charge in the country of receipt'.'Subject to reverse charge in another member state'.'This is a UK exempt supply which may be chargeable in the country of receipt'.'This is a UK exempt supply which may be chargeable in another member state'
Germany operates VAT slightly differently to the UK in that practically all legal businesses are issued with a VAT number even if they are exempt from VAT. Therefore your client must request their customers VAT No. even if exempt.
Without a VAT number, I think you are obliged to treat the German customer as a "consumer" and apply VAT at 20% to your (or rather your client's) bill.