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EU non-profit organisations for VAT reverse charge

Are EU non-profit organisations deemed businesses or consumers for VAT reverse charge

I have a client who will be invoicing consultancy services to EU-based non-profit organisations. These NGOs seem to be VAT exempt so I am struggling to determine if the client should reverse charge the VAT (i.e. treat them as an EU business) or charge VAT (treat them as a consumer). We have lots of evidence about what these organisations do but nothing that I could say indicates they are a business in the traditional sense i.e. by definition they are not aiming to make a profit but they clearly act in a businesslike fashion.

Could anyone assist ?

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10th Aug 2018 12:36

I would put the obligation on the recipient. Tell them you are charging UK VAT, unless they can provide adequate evidence that they are a 'taxable person' as defined by the European PVD.
Your client will be liable to pay the VAT if you incorrectly treat it as a B2B service.

Thanks (1)
to leshoward
10th Aug 2018 13:17

Thanks Les, I was hoping you would reply ! Could you clarify that if the reply is 'no' i.e. the NGO is not a taxable person that that would also define them as not being a business for VAT purposes ? I recall reading that a non-VAT registered business would still be treated as a business if other circumstances pointed to it but I've never seen a definition.
The client is nervous that being seen as difficult would just result in the contract being cancelled and wants to be sure of the position ahead of the discussion or to at least have some more knowledge. It's a bit too esoteric for me.

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to gerrysims
10th Aug 2018 13:45

It does depend on what the NGO does, and also what it does in relation to the supplies in question.
I have come across NGOs in business, and those not in business.
There is some guidance here: https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-services/va... but it still begs some questions!

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to leshoward
10th Aug 2018 14:36

My rule of thumb is that if they charge for services (somewhere in the org) then they are in business, even if they are not doing it for commercial reasons or outcomes.

Don't forget to document your reasoning...

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10th Aug 2018 15:05

Thanks both. That gives me enough to respond to the client for them to make further enquiries.

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