vat on services provided to businesses in italy by a uk company

vat on services provided to businesses in italy...

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vat on services provided to businesses in italy by a uk company

 
i have worked out that my uk company (which isn't vat-registered), which will provide consultancy on marketing and visual display to italian companies, will not need to charge uk vat, and will use the 'reverse charge' system for invoicing the italian companies
 
but i can't work out if the italian iva-registered contractors (shopfitting etc) who may carry out the actual work in italy (if i win the contracts) will have to charge my uk company iva or not - in other words are they supplying a uk-based company and therefore don't have to charge iva?

any pointers would be greatly appreciated!

 

Replies (14)

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chips_at_mattersey
By Les Howard
08th Aug 2013 09:37

Registration for VAT

My inclination is to seek registration for VAT in the UK; (the alternative might be that you would have to register in Italy). You are entitled to do this, even though you do not make supplies here.

The supplies relating to shop-fitting fall within the 'General Rule' so the reverse charge will apply to your Italian IVA-registered sub-contractors invoicing you (as long as you are VAT registered).

It would be worth having fuller written advice on the issue, to give you certainty.

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By spidersong
08th Aug 2013 10:42

Is this General Rule?

The supply of consultancy on marketing will be general rule B2B and where customer belongs, but surely any shopfitting services will be services related to land and the place of belonging is irrelevant and the service is taxable where the land is situated?

I must admit I haven't kept a keen eye on the recent place of supply changes, but isn't this still covered by Sch 4a Para 1 / Article 47 and place of supply of shopfitting will be Italy and not only will the contractors charge IVA but the OP will gain a possibile liability to register in Italy as supplying land related services? I'm not sure Reverse Charge applies here although of course it may be that Italy has extended the Reverse Charge to land related services as the UK has done for services supplied here. I've not had to deal with Italian POS rules so I'm in the dark on that I'll cheerfully admit.

Of course I'm also not sure how someone who's providing consultancy wins a contract for construction services, is the OPs actual supply consultancy or are they designing shopfronts (another land related service)?

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Replying to Homeworker:
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By unthank
08th Aug 2013 10:52

it's not construction services

the consultant designs point of sale units (mainly moveable, normally temporary) and display systems for selling clothes, bags, watches, etc inside trendy shops. these are then put in and regularly changed by the italian 'display' team. only occasionally would a 'permanent' 'shopfitting' take place. 

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Replying to Homeworker:
chips_at_mattersey
By Les Howard
08th Aug 2013 11:58

General Rule

I did wonder whether the Land-Related services category would be more appropriate, or whether the services are 'Work done on goods.' The line is quite fine, I think, and the guidance I looked at could be read either way. Hopefully the client will seek something formal in writing to protect his position.

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By shaun king
08th Aug 2013 11:53

IVA

The Italian sub contractors who provide "change of display" services will charge IVA if the UK customer cannot provide a UK VAT registration number. Italy, like many other EU Member States work on the basis that to be a taxable person you must be registered for VAT. Unless the UK voluntarily registers for UK, I can't see why it wouldn't want to, they will most probably suffer IVA.

If the shop fitting is work on immovable property then the place of supply will be Italy but the UK cannot register for IVA as it is non established so the local reverse charge applies and customer as long as they are registered accounts for IVA. However, that means that any IVA incurred must be recovered under the Refund Scheme..

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By shaun king
08th Aug 2013 13:10

I don't think so

Les

 

I have looked at Italian VAT legislation and it is not work on immovable property as that has to be related to the building itself as the Italians clearly differentiate between Movable and Immovable property and there are no "goods" to work on if it POS material?

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By unthank
08th Aug 2013 18:14

easy doing business in the EU isn't it!

so if my italian 'display team' goes into the 'giovanni lewis store' in rome and changes the cabinets and point of sale display materials, then they will charge me iva, and i can avoid that by voluntarily registering for uk vat and then they will charge me on the 'reverse charge' rules instead.

meanwhile i will charge 'giovanni lewis' for my consultancy and their display changing services in one invoice on the reverse charge rules as well?

if i don't register for vat in the uk, then i will get charged the iva by the display team, and this will not be recoverable in any way?

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By User deleted
08th Aug 2013 21:21

Surely ...

... the point is, as Les intimated, if you are not UK VAT registered, reverse charging doesn't apply and you should be charged iva. As said above, for reverse charging to apply you have to provide a valid UK VAT number.

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By User deleted
08th Aug 2013 23:30

NO ...

... if you are not VAT registered you will have to pay the iva, same as you would pay VAT on work done for you in the UK. Your cost will be the gross VAT/IVA inclusive amount and your mark-ups and costings should be done on that basis, which will make you less competitive as your costs will be 20% higher than your VAT registered competitors.

If the bulk of your work is for VAT registered businesses, it would generally be best to register for VAT - depending on the category, you might even be better off on a flat rate scheme. That said, you should not do this without consulting a suitably competent person.

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By shaun king
09th Aug 2013 12:32

Yes

If you don't register for UK VAT you will be charged IVA and you will not get it back and as Old Grey says it will increase your charge back to Italy by 20% as you will subsume your IVA cost into your sales price. Also you may find, as happens in Spain, that an Italian customer will not deal with you unless you can provide a UK VAT registration number.

Italy has strange practices with regards receipt of reverse charge invoices as their VAT legislation required them to create a sales invoice to match your purchase invoice. I witnessed in one large multinational in Rome a lady whose job it was to take purchase invoices from non Italian suppliers down two flights of stairs to the accounts receivable department to get someone to create a sales invoice and then she walked back with a copy of the sales invoice so someone could then process the purchase invoice.

Italian IVA accounting is unreal as we should never complain in the UK!!

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By unthank
09th Aug 2013 14:18

many thanks - but is it the same for spain please?

thanks for all these comments, and helpful advice - interesting that someone mentions spain, because there is a strong possibility that spain will be next for our services - does that mean we have to start all over again with these questions, or is spain the same as italy (only joking, that isn't possible, is it?)

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By User deleted
10th Aug 2013 15:37

Yes ...

... the principal will be the same for Spain.

That said, surely with this level of trading you must be nearing the VAT threshold anyway though?

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By shaun king
11th Aug 2013 12:38

Spain

Afraid it s start all over again and the rules aren't always the same, so assume nothing.

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By darrenbb
24th Dec 2013 10:56

VAT registration in Italy / Spain

Does anyone have any experience of trading in Italy without a VAT number. Do the Italian and Spanish companies  not like to do business with non vat registed businesses. I am in the position that Iam reluctant to register for VAT as our prices to UK customers would increase accordingly. However many of our prospective suppliers are EU based. It seems that most Italian /Spanish companies do not see you as a legitamate business if you are not VAT registered... Any thoughts would be appreciated

 

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