Salary & Expense Recharge

VAT on recharging of salary and expenses to overseas company in same group but not same vat group

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I have a question I am hoping someone can point me in the right direction. 

We are a UK VAT registered comany, one of our Directors who is paid by us in the UK company, we will be starting to recharge an apportionment of his salary to one of companies in the same Group who is overseas  but not in the same VAT group. 

As they are overseas is the salary recharge subject to us charging VAT or is outside scope of VAT? 

Also any expenses occured i.e. travel, hotel etc the UK company will be paying/reimbursing the individual and these costs are to be recharged to the overseas company (some of these are overseas expenses where we cannot reclaim VAT althought I believe some will be UK expenses  e.g. hotel stay at airport, evening meal etc where we will be charged VAT on some elements)  When recharging expenses do we have to charge VAT on the recharge of expenses for everything (e.g. overseas expenses £500, UK expenses £100 - Total £600) is whole value subject to VAT or just the UK element where we have been charged VAT? 

Replies (3)

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By the_drookit_dug
13th Nov 2019 14:24

Where is overseas?

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Replying to the_drookit_dug:
By welsn3
13th Nov 2019 14:39


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By paul.benny
13th Nov 2019 15:26

You could start by looking at the Place of Supply rules in VAT741a.

In addition to VAT...

The German tax authorities (I've no direct experience of Switzerland, but there's a good chance it's similar) are very keen on there being a proper written agreement between the companies to cover management recharges like this. It should set out the services being provided and the basis for the charge.

You should also think about transfer pricing. HMRC would expect the UK entities to be making a margin on recharge of services to other group companies.

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