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Estate Agent commission charged to Swiss customer

Estate Agent commission charged to Swiss customer

My client, an estate agent based in UK  has just sold a property and has earned a six figure commission. The customer (who will pay the commission) is based in Switzerland, which I believe is not in the EU.

Should UK vat be charged by my client?

My thoughts are that no Vat is chargeable. But would be grateful for confirmation.



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05th Oct 2011 22:38

VAT is chargeable if the property is in the UK

Under special rules the "place of supply" for any property services is where the property is. Have a look at www.hmrc.gov.uk/vat/managing/international/exports/services.htm


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By aadil
to ShirleyM
06th Oct 2011 11:08

Thanks Paul. So even if the commission is charged to a business in a NON EU country, the UK business still has to charge VAT? How can the foreign business get relief for this VAT? Would there be some sort of process for them to follow to reclaim the VAT.


In this case the foreign business is refusing to pay the UK VAT.


I should be grateful for further guidance on this.



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06th Oct 2011 11:40

No reclaim

Since Switzerland isn't in the EU, as you say, the Swiss business customer cannot recover the VAT.  It is a cost.

Ideally, the issue would have been addressed when the instruction was taken and a VAT inclusive commission agreed.

What terms and conditions did the customer agree to?  Did they mention VAT?

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06th Oct 2011 11:56

Just an extra cost

Hi - if you look at the link you'll see that in the majority of cases the place of supply of services is determined by where the customer or supplier belong and so if you were providing consultancy services to a Swiss company the place of supply is Switzerland and so is outside the scope of UK VAT, if however you were providing services to a non-business then the place of supply is the supplier (UK) and so UK VAT applies.

The above general rules are ignored though in special cases, property being one, as services connected with a property will always be taken as supplied in the country where the property sits.

I'm not a VAT expert but don't think I've missed anything here.  I'm afraid I don't know of the mechanism, if any, whereby someone in Switzerland can relaim UK VAT.  They operate a similar VAT system to Europe and so I'd be surprised if there wasn't some form of reclaim but it may be restricted.

In the past The VAT Consultancy www.thevatconsultancy.com/index.html       has helped me sort out tricky stuff so may be worth a call.  I have to say however that, I'd regard this as a problem for the customer rather than the seller or you but obviously you want to get the money.


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