Recovery of Italian VAT

Recovery of Italian VAT

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I have been charged the costs of a promotional job in Italy via a UK supplier. This supplier has included 20% Italian VAT in their invoice to me and then added 17.5% UK VAT. I believe that this Italian VAT is recoverable by the UK supplier and therefore not a charge to me. HMRC say it depends on what Italy will allow to be reclaimed. Does anybody have any experience of this kind of situation? Thanks.
John Gillespie

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By ashasiva
13th Feb 2006 09:53

Intra stat returns
you should inform your UK vat number to your italian supplier, which will excempt you being charged EU vat by an EU supplier. In your case as you already have paid this, the supplier will have to refund you the vat, once you inform your vat reg.

you have to declare that in your Intra stat returns to Customs & excise.

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By theaardvark
13th Feb 2006 11:45

Advertising services should not be subject to Italian VAT
Under EU law, advertising service including most PR work are "reverse charge" services. This means that the supply by the Italian company, because it was to a UK VAT registered business was deemed to be supplied in the UK. The Italian company should not have charged Italian VAT.

The UK company should have accounted for UK VAT under the reverse charge procedure but would have been able to claim it back. There would therefore have been no need to charge the Italian VAT on to you.

Regards

Paul Taylor
VATease - VAT Advice

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By dclark
10th Feb 2006 16:05

My thoughts
I will preface this by saying I'm not a VAT expert, but I have dealt with IVA before in the terms you express.

Recovery of Italian VAT - technically as they are part of the EU you can reclaim it, if all the right boxes are tickets (having suppliers VAT number, correct naming, etc) if it is charged to you by an Italian firm. In practical terms you are wasting your time as my experience was you never got a refund

VAT chargable - the invoice to you for 'services' is from a UK business. They should charge you VAT on 'services' they provide to you. If in arriving at their 'services' figure they use an invoice value for expenses to calculate it, it does not alter the UK VAT position

IVA charged to you - I'd argue they have not charged you Italian VAT, all they have charged you is the 'cost' of items bought in Italy. They have a relationship with their Italian supplier, not you, so you can't recover the IVA.

I'd be back to your UK supplier saying that your agreement with them was to charge time and materials pre-VAT and to give you a credit note for the 20%. It is for them to recover the 20% from Italy (which they probably won't achieve)

Waiting to be corrected !!!

Kind Regards

Daniel

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By johngill
10th Feb 2006 16:47

Thanks for the reply Daniel.

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