Supply of Services to a company in EU Member State

Supply of Services to a company in EU Member State

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I am looking for some clarity on the charging of VAT to a company that is VAT registered in another EU member state.

For example 

A UK registered company provides a mail service to another UK registered company
The mail is received at one UK address and sent to another UK address
The UK company that receives the service is ultimately managed/owned by a German company that is registered in Germany for VAT.

The German company has provided their details for the invoice. The German company pays for the service. The German company has an EU vat number and requests no VAT be charged.

Should the supplying company omit VAT or should they charge VAT regardless of who is paying.

If you have the answer can you reference the relevant HMRC rule on this?

Replies (4)

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By paulwakefield1
21st Nov 2011 15:08

Have a look at...

HMRC Notice 741A and, in particular at paras 3.2 (especially bullet points 2 and 3) and also para 3.6 and the examples. I think these will help though the answer will depend on the facts.

On the information given, it is clearly B2B and the supplier would appear to be clearly in the UK. From the above I would tend towards the view that the customer is also based in the UK for VAT in this case but there may be other factors which would change this view.

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By MikeH
21st Nov 2011 16:58

This is where I am struggling to find clarity.

Is it a fixed establishment?

What if there is no physical trading in the UK and they use a virtual address for the sake of having a UK company registered?

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By paulwakefield1
22nd Nov 2011 07:36

Sorry

I haven't got practical experience of fixed establishment questions. Hopefully this post will act as a "bump" and someone will answer it.

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Euan's picture
By Euan MacLennan
22nd Nov 2011 11:02

Fixed establishments

Read VATPOSS04500.

However, I am confused by the question(s). If "the mail is received at one UK address and sent to another UK address", then the customer presumably has staff dealing with its incoming mail at that other UK address, which would make it a fixed establishment.  As the service is being provided to the customer at his UK establishment, VAT should be charged in the usual way.

"What if there is no physical trading in the UK and they use a virtual address for the sake of having a UK company registered?".  Is this meant to be an extension of the original question or a different one?  Presumably, if it is a "virtual address", whatever that may mean, there is no UK establishment and the mail would have to be delivered to the German parent company.  Under the usual B2B rules for international services, this service would be supplied in Germany under the German reverse charge VAT rules and no UK VAT should be charged.

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