VAT to charge?

VAT to charge?

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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

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By User deleted
11th Apr 2012 19:45

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).

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Replying to Gone Sailing:
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By richard20
11th Apr 2012 19:58

Thanks for you quick response.

The service is mediation.

I have read and re-read HMRC website about place of supply; I understand that the place of supply is Germany, but cannot deduce what this means for my client.

Can you explain to me what my client must do in terms of VAT on it's sales invoice.

Kind regards

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By Hansa
11th Apr 2012 21:18

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.

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