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VAT on EU services

I have a situation where there is a German holding company which is just an investment company and so can't recover VAT in Germany. The German accountants have raised a fee for general advice provided to the company but raised the fee to the UK group parent (which can recover all VAT as it makes management service charges). Applying the reverse charge would give us input tax in the UK which in theory we can recover? It doesn't feel right though that by just raising the fee to the UK we can recover the VAT. Am I missing something?

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By Ruddles
20th Apr 2018 16:36

You're missing the fact the the UK company would need to account for the output VAT as well.

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20th Apr 2018 23:33

If they have raised a ‘proper’ reverse charges invoice, they won’t have charged VAT. The UK company - as Ruddles says - will need to declare both the input & output VAT equivalent, giving no net VAT affect (which if you think about it is correct as the German accountants didn’t add vat to their invoice).

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