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To VAT or not to VAT?

Should we be applying or expecting RC VAT to apply on a sale of electronic reports

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Tony Fosse

We have a sale to a customer in Germany, with an electronic report deliverable but the order has been placed through a "procurement agent" in Japan, asking us to invoice them. Our belief was that under place of supply rules, it would either be Germany (where the end customer is based) or the UK (where we are based), but the "agent" company is quoting
“Service cf. art. 44 EU VAT Directive 2006/112 (place of supply is Germany)”
“Reverse charge cf. art. 196 EU VAT Directive 2006/112 "

saying that their advisers (and their multi-national clients) have told them we should not be charging VAT. It is not clear to us, whether the statement above means the (German) end-client will be applying reverse charge VAT, or that NO VAT at all would apply. We have a number of other situations like this, and are keen to ensure (a) that we do not fall foul of UK/EC VAT regulations, and (b) that we apply the correct treatment in all cases.
Has anybody else come across this situation or know which approach is correct?

Replies (2)

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By Les Howard
22nd Aug 2018 11:00

VAT does apply. By using the Reverse Charge, VAT is applied, albeit in the hands of the recipient.
I would want to review the contractual position of the 'procurement agent,' to confirm that they are acting as agent, and whether the PoS is altered to Japan.

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22nd Aug 2018 17:17

Sadly, just a one-page order sheet, with no T&Cs and a "ship to" address that is an "end-client" employee, at their German address, and the order just says invoice separately from the product shipment, and the page is littered with references to the end client, and the quote I put in my original positing. Feels to me as if it should be subject to RC VAT but they are insistent that they have tax/client advice/instructions that it should not attract VAT of any sort.

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