VAT on Sale of company Laptop to EU Contractor

VAT on Sale of company Laptop to EU Contractor

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Hoping for some input from any VAT experts out there.

UK Ltd VAT registered client purchased a laptop for use by their business for an EU based (Spain I believe) international team member (contractor). The contractor and client are now parting ways and the contractor wishes to purchase the laptop.

The client is not registered for VAT anywhere other than the UK.

The laptop was originally purchased in the EU and never entered the UK, so no UK (or EU VAT) recovered on purchase.

On sale I believe this to be outside the scope for UK VAT (?) however I am unsure of the position regard EU VAT.

Does any one have any experienence in this situation?

Replies (4)

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Caroline
By accountantccole
12th Dec 2023 15:48

No UK VAT but you would technically need to consider VAT in the country where the goods are located. Given non resident cos often have no de minimis for registrations I suspect scrapping the asset / giving it to them at no value will be a lower hassle option.

Thanks (1)
Replying to accountantccole:
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By PFunk1980
12th Dec 2023 17:16

I did wonder if this was all going to be a lot of hassle for such a small value (NBV of laptop around £600).

Thanks so much for the input.

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VAT
By Jason Croke
12th Dec 2023 16:07

Place of supply of goods tells us that the VAT is based on where the goods are at time of sale.

Goods are in Spain, ownership changes from UK seller to Spanish buyer in Spain. UK seller is not established in Spain, therefore as a non-established business the VAT registration threshold in Spain is Nil and UK entity has a requirement to register for Spanish VAT.

As the goods are already in Spain and in the possession of the Spanish buyer/ex-contractor it may be a case of having to fudge this.

Outside the scope of VAT could indicate the transaction relates to services (rather than goods) but you're selling goods not services. It's not zero rated as an export either as no export has taken place (the laptop was acquired and sold in Spain).

Are we talking significant values here or a more modest laptop price of <£1.5k? Not saying the value changes the rules, but a lower value equates to a lower risk.

Thanks (2)
Replying to Jason Croke:
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By PFunk1980
12th Dec 2023 17:15

First of all thank you so much for taking the time to reply.

Somehow when I look at the trail and a further conversation with the client it actually looks like the laptop was purchased in Spain but has made it's way to Italy, which seems to suggest the Laptop belonged to an initial contractor in Spain (for a period) and then distributed for use in Italy, when the Spanish contractor left the business. The Italian Contractor now wishes to purchase the laptop.

Has this new information unearthed an initial VAT obligation when the asset transferred from Spain to Italy?

Cost of the laptop initially was circa £1500, was planned to be sold for circa £600 now (3 Year old device).

Such a headache for tiny amounts!

Thanks again for your input.

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