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VAT treatment for Google app sales

Not VAT registered... any reason/benefit to register voluntarily?

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This questions relates to handling of VAT for a Ltd Co (registered in England & Wales) earning revenue from app sales through the Google Play Store.

The developer distribution agreement sets out the relationship between Ltd Co and Google: https://play.google.com/about/developer-distribution-agreement.html

Regarding VAT, it seems that for many/most countries, Google is responsible for collecting VAT and remitting it to the appropriate authorities: https://support.google.com/googleplay/android-developer/answer/138000.

So, for these countries at least, the Ltd company is not collecting VAT per se, because Google is.  Ltd Co just gets a monthly amount from Google, after Google has taken off VAT and their fee.

Let's assume that this is the only source of revenue for Ltd Co, and these are the only countries the Ltd Co is distributing their apps to.  So Ltd Co is collecting no VAT itself.  Google does provide a full breakdown of all the VAT they are collecting through sales of Ltd Co's apps.

But Ltd Co is of course incurring costs and paying various suppliers (for e.g. hosting, data, equipment etc).  These suppliers are in the UK and also in the EU and the US.  Those suppliers are including VAT in their invoices to Ltd Co.

So, Ltd Co effectively has no output VAT on sales (despite the end user having to pay a higher price that includes VAT)... but significant input VAT on purchases.

In this scenario, if Ltd Co is below the mandatory threshold for VAT registration, is there any point in Ltd Co becoming VAT registered voluntarily?

Thanks.
 

Replies (33)

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By rmillaree
07th Jan 2022 10:55

, is there any point in Ltd Co becoming VAT registered voluntarily?
presuming it works as you have suggested then yes!

due to teh following items where there would be the ability to reclaim vat.
"significant input VAT on purchases."

Note there is the issue of unintended knock on consequences of being vat registered - and the hassles of being vat registeerd to take into account.

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VAT
By Jason Croke
07th Jan 2022 10:56

You are correct.

Google/platform are making the sale to the end customer, your client receives a commission for that sale from Google/platform, so your clients customer is Google/platform, not the individual customer wherever they might be.

Google aren't based in the UK, so the place of supply of services rules say the place of supply of your services (the commission on the sale) is where the customer is based, Google is not based in the UK and therefore the sales (commission) are outside the scope of VAT.

If the only income your client receives is from Google/outside the scope of VAT, the client is still entitled to register for UK VAT voluntarily on the basis the sales they make "would have been standard rated" if they were made to a UK customer, this means your client can register for VAT, declare no output tax but reclaim all their input tax as normal. A voluntary registration can be made at any time/any turnover level, as your client is always going to be under the compulsory registration threshold (assuming they only sell to Google) as they'll only ever make outside scope sales).

Paragraph 2.9 https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-r...

Whether they should register voluntary will be driven by how much input tax is at stake vs cost of registering/submitting VAT returns, MTD compliance, effort, etc. If the input tax is a couple of grand, probably not worth it unless they do their own VAT returns else savings would be eaten up by book-keeping/Accounting fees. Also factor in time/effort of ensuring business is compliant with MTD, risk of errors, etc.

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By drmrbrewer
07th Jan 2022 12:30

Thanks so much @jason-croke and @rmillaree.

For further clarity, can I provide a specific example? Let's say, for example:

Store selling price (controlled by Ltd Co):
EUR 28.68

Google adds VAT:
EUR 6.31

End customer (of Google) pays:
EUR 34.99

A couple of weeks later, Ltd Co gets from Google:
EUR 24.38
(what's left after Google take their cut of the EUR 28.68... though this cut isn't specified explicitly in the sales/earnings report)

Ltd Co receive into their GBP account, after currency conversion:
GBP 20.65 (exchange 0.84707)

So the "sale that Ltd Co would have made at standard rate if to a UK customer" in this case is GBP 20.65? What input VAT would be reclaimable in this example?

It's messy, but it looks like the "Google" that acts as Merchant of Record for each sale depends on the location of the end customer (of Google): https://support.google.com/googleplay/android-developer/answer/10532353

So in the above example (customer in Germany) the Merchant of Record is "Google Commerce Limited" (Ireland).

But the payment (of GBP 20.65 in the above example) comes from "Google"... unclear at present which "Google" that is. But according to the developer distribution agreement (linked in the original post), none of the companies under the "Google" definition is based in the UK.

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Replying to drmrbrewer:
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By rmillaree
07th Jan 2022 13:00

"What input VAT would be reclaimable in this example?"

As Trever Steel has confirmed its the vat charged by your suppliers - that can all be reclaimed to the extent that its uk vat being charged to you by suppliers.

You may also be able to reclaim some foreign vat - note i would expect most overseas businesses would no charge you vat on the basis you are a uk based business customer and reverse charge would normally apply on "services" provided (goods wil be more compciated) - note you may need to actively advise you are a business customer and should not be charged vat if they are not uk based/dont have uk vat number.

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Replying to rmillaree:
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By drmrbrewer
07th Jan 2022 13:32

I'd say that the main suppliers are based in the EU, and currently adding 20% VAT to their invoices to Ltd Co. So the upshot is that they shouldn't be adding VAT when invoicing a UK Ltd Co (and I should ask them not to) if they don't have a UK VAT number... even if the UK Ltd Co is not VAT registered? (Who invented VAT?)

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Replying to drmrbrewer:
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By rmillaree
07th Jan 2022 13:00

"What input VAT would be reclaimable in this example?"

As Trever Steel has confirmed its the vat charged by your suppliers - that can all be reclaimed to the extent that its uk vat being charged to you by suppliers.

You may also be able to reclaim some foreign vat - note i would expect most overseas businesses would no charge you vat on the basis you are a uk based business customer and reverse charge would normally apply on "services" provided (goods wil be more compciated) - note you may need to actively advise you are a business customer and should not be charged vat if they are not uk based/dont have uk vat number.

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Replying to drmrbrewer:
VAT
By Jason Croke
07th Jan 2022 13:03

My initial thought is that your clients selling price/turnover is €28.68 net...and not €24.38

Google may well net off their fees so that client only receives €24.38 but the Google fees are an expense. It's a common mistake made by businesses who trade on eBay or Amazon, they sell a bottle of shampoo for £12 but only receive £9.00 after listing fees/paypal fees and so record the sale as £9.00 in the accounts to match the bank deposit, but in reality we have sales/turnover of £12 and expenditure of £3.00 so don't fall into the trap and under record sales.

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Replying to Jason Croke:
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By drmrbrewer
07th Jan 2022 13:37

That's a very interesting point, thanks. The way that Google reports these earnings is horrible... for those sales where are responsible for collecting VAT (where they are merchant of record) they don't explicitly set out their fee. In one report (spreadsheet) they detail the selling price (€28.68) and VAT (€6.31) and then in a completely different report/spreadsheet they detail what they are handing over to you (€24.38), leaving you to make the link between these two bits of information from two different sources and work out what they are actually taking as their fee for the sale.

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Replying to Jason Croke:
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By drmrbrewer
08th Jan 2022 10:31

Thinking about this again, if (as I think you said before) the customer of UK Ltd Co is Google (who then sells to the end buyer via Google's marketplace), and using the example numbers I gave, shouldn't this effectively be treated as follows:

UK Ltd Co sells to Google at €24.38
Google sells to end customer at €28.68 (adding €6.31 VAT on top)

... thereby Google make their cut from the difference €(28.68 - 24.38) and also account for VAT and submit to appropriate authority.

But so far as UK Ltd Co is concerned, the sale price is €24.38 not €28.68?

There must surely be some sort of official guidance on this from HMRC because it must be *such* a common situation?

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Replying to drmrbrewer:
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By rmillaree
08th Jan 2022 11:34

I am presuming the vat we are talking about here is all non uk !

"UK Ltd Co sells to Google at €24.38
... thereby Google make their cut from the difference €(28.68 - 24.38) and also account for VAT and submit to appropriate authority."

These amounts should not be up for dispute your sale to them and their "services fee to you " - certainly google must provide you with an an invoice for their fees to you. And you need to know what your gross sale is to google - thats up to you and google to choose but google will certainly be able to advise ​what they think you are selling to them for.

The tricky bit from my point of view is the deduction ref vat google should be quizzed that too - -personaally i wouldnt ever presume whose vat it is nowadays without asking although i would guess someone will probably know the answer on this board with there being so many exceptions to the normal rules at times is really. It may be obvious when you look at your sale to google and their sale to you

Practicably speaking if its your overseas vat beeing paid by google on your behalf that "deduction" i would expect be a disbursment as far as google are concerned to put you back in the same position as if you had declared the same vat directly to the eu authorities.
If if its googles vat then its not your issue - i would expect though that your invoice to google or their commision to you should be adjusted for the vat they have to suffer - unless that already have that factored into their standard markup.

"There must surely be some sort of official guidance on this from HMRC because it must be *such* a common situation?"

Its up to the two parties involved to agree the gross vat net situation - hmrc do not do your job of calculating stuff. Rules are complex and can depend on subtleties or contracts between parties, and hmrc do not advise ref foreign vat !!! so if its foreign vat at play hmrc will not even offer an opinion normally . At best vat office will normally only confirm if uk vat needs to be charged based on the very specific circumstances being outlined. Having said that you may get a bit more out of them ref obligations in uk for marketplace sellers or ioss or similar if its part of their remit.

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Replying to rmillaree:
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By drmrbrewer
08th Jan 2022 12:26

rmillaree wrote:

certainly google must provide you with an an invoice for their fees to you.

Certainly, Google don't! Two spreadsheets per month is all they produce (and for sales, another for earnings). And a monthly payment into your bank account. No invoice. This is what makes it all so confusing.

My latest comment (to which you replied today) is less about VAT on this particular transaction but more whether Ltd Co should register for VAT in the first place, given that they have no output VAT (Google is handling it)... and how to account for these transactions in the books, referring to the following comment from @json-croke:

json-croke wrote:

If the only income your client receives is from Google/outside the scope of VAT, the client is still entitled to register for UK VAT voluntarily on the basis the sales they make "would have been standard rated" if they were made to a UK customer, this means your client can register for VAT, declare no output tax but reclaim all their input tax as normal.

So what I'm trying to work out now is what the value of the "sale" is i nthe above context... is it €24.38 or €28.68 or something else? I think @json-croke was suggesting it should be €28.68, but I'm not so sure anymore... hence my further question.

And I'm not expecting Google or HMRC to do my books for me, but I would expect some more helpful guidance from either or both of them, because there will be countless others who are equally confused.

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Replying to drmrbrewer:
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By rmillaree
08th Jan 2022 13:31

"Certainly, Google don't! Two spreadsheets per month is all they produce (and for sales, another for earnings). And a monthly payment into your bank account. No invoice. This is what makes it all so confusing."

Have you directly asked them for copies of vat invoices
5 second google search gives us teh following

Request a VAT invoice for Google purchases
Sign in to Settings.
Check that you've entered your tax ID number. ...
Click Activity.
Click on the transaction that you want an invoice for.
At the bottom of the transaction details, click Download VAT invoice or Download VAT receipt.

"My latest comment (to which you replied today) is less about VAT on this particular transaction but more whether Ltd Co should register for VAT in the first place, given that they have no output VAT (Google is handling it)... and how to account for these transactions in the books, referring to the following comment from @json-croke:"
I think this has been reasonably well covered its your choice

"So what I'm trying to work out now is what the value of the "sale" is i nthe above context... is it €24.38 or €28.68 or something else? I think @json-croke was suggesting it should be €28.68, but I'm not so sure anymore... hence my further question."
You will need to confirm with google if you have any doubts - note as per other post vat might be your vat payable overseas and it might not ! Anyone speculation here might be correct but is probably making reasoned guess that could be wrong.

"And I'm not expecting Google or HMRC to do my books for me, but I would expect some more helpful guidance from either or both of them, because there will be countless others who are equally confused."

It's up to you whether you deal with organisations like gogle - vat invoices are pretty universal business to business though so google should assist here - if their customer service is poor you just need to work harder - i would expect if pushed they would be able to confirm whetehr they or you are acounting for vat and wait your sales upply to them is - you might be able to generate your sales invoice to them if its self billing arrangemnt - other than that you and google need to confirm value of your supply to them - google must know that value IMHO. In summary as per earlier post you and google are the only two parties who can agree the net value of your sale no one else can decide that sum.

Bascially all these big businesses tedn to do the very minimum they need to to meet regulatory requirements - they dont want to waste their time or effort doing any more than statutoy minimum as that how they mke their money - if you don;t like it their attitude is tough they have you by the short and curlies unfortunately if they deliver what you need.

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Replying to rmillaree:
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By drmrbrewer
08th Jan 2022 15:26

Those steps you quote for requesting a VAT invoice from Google appear to relate e.g. to purchases *from* the Google Play Store, e.g. for a Crossy Road app:

https://support.google.com/pay/answer/7644144

I'm not sure, as a business *selling* an app *via* the Play Store, what purchase it is that I'd be requesting a VAT invoice for?

It's possible to download a formal payment receipt for each payment from Google, but that's about it. This is from Google Payment Ltd (UK address).

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By Trevor Steel
07th Jan 2022 12:50

I think that there are two aspects to this.

I would see Google's share of the income as a "payment" for the services that they are providing to you. They are based overseas and the place of supply of those services is in the UK. So if you were registered for VAT, you would be required to account for VAT on the "Google share" through a reverse charge, but be entitled to reclaim it again as input tax - i.e. a net nil. These transactions do count towards the VAT registration threshold - so even with no other UK business activities, if the "Google share" of the transactions exceeded £85k pa, you would have to register for VAT anyway.

When considering whether a voluntary registration is worthwhile, the figures that you've provided aren't the important ones. You need to consider the VAT that you're being charged by your suppliers. That is what would become recoverable if you VAT registered, so you need to compare the benefit of that with any additional cost or work involved in being VAT registered.

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Replying to Trevor Steel:
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By drmrbrewer
07th Jan 2022 13:43

Thanks for this insight. Yes, it may will not be worth voluntarily registering for VAT ultimately, given the complexity of it all and the extra cost in professional services and time. And it is indeed complex!

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By Brend201
07th Jan 2022 15:09

I have the same difficulties. We are registered for VAT and have no revenue other than from app sales. We have lots of input VAT and recover that in full. A couple of years ago, we had a long and detailed scrutiny by the Revenue (although we are not in the UK) of our accounting for revenues and claims for refunds. No difficulties arose and all subsequent refunds have been paid without question.

I believe Jason Croke is correct in describing the sale as a Google/platform sale in which we, technically, receive an 85% commission from Google/platform. However, I am not keen on the idea of trying to account for the full net sale value (i.e. the amount paid by the subscriber less VAT for the relevant country) separately from the Google "take". The reporting from Google (and the equivalent reporting from Apple) is most unsatisfactory and makes accounting more difficult than it needs to be. In our case, we just record the net amounts received from Google/Apple as income. It can be difficult to identify the precise amount of their take from the spreadsheets that they provide so to attempt to add their take to the net amount to arrive at the gross revenue would cause a lot of extra work for little or no benefit.

I don't think that it matters much where the Google entity is based as they (Google) are correctly accounting for VAT and related taxes in all jurisdictions.

Your suppliers, if both you and they are based in the UK, should (I believe) be charging UK VAT to the UK Ltd Co. If the UK Ltd Co is not registered, the UK input VAT becomes a cost, unless it decides to register for VAT as that would facilitate recovery.

Separately, in our case, we try to identify the subscriptions that are renewals and those that are new, because retention/churn are important issues in the context of recurring revenue. Up to recently, it was possible to identify new subs by the fact that the Google/Apple take was 30% in the first year and then 15% after that. The task became more difficult when they both reduced their take to 15% on all subs revenue (up to $1 million I think). I am working on a complicated Excel solution to that one.

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Replying to Brend201:
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By drmrbrewer
07th Jan 2022 16:28

Thanks, @Brend201, it's interesting to hear from someone who is in this exact position (although you're not in the UK?).

Brend201 wrote:
The reporting from Google (and the equivalent reporting from Apple) is most unsatisfactory and makes accounting more difficult than it needs to be. [... ]It can be difficult to identify the precise amount of their take from the spreadsheets that they provide [...]

Exactly... I said much the same thing in another reply here (search for 'horrible')! Why they can't put all the relevant information into a single line for each transaction, in a single spreadsheet, is beyond me.

Brend201 wrote:

Your suppliers, if both you and they are based in the UK, should (I believe) be charging UK VAT to the UK Ltd Co.

What if the supplier is in Finland, or Germany, or the US. Should they be adding VAT for a sale to UK Ltd Co, and if they do then presumably it's not recoverable by UK Ltd Co?

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Replying to drmrbrewer:
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By Brend201
07th Jan 2022 17:06

drmrbrewer wrote:

although you're not in the UK?

No. Ireland.

What if the supplier is in Finland, or Germany, or the US. Should they be adding VAT for a sale to UK Ltd Co, and if they do then presumably it's not recoverable by UK Ltd Co?

That's a tricky one. In most cases, I would say No, they shouldn't charge any VAT, as a default (and I would also resist paying it if charged!). However, each country is likely to have slightly different rules and it can be difficult to recover such VAT. The US supplier shouldn't charge any US taxes but could, in some cases, be registered for UK VAT but otherwise I wouldn't expect to pay any VAT to them. If the amounts are material, it could be worth getting specialist advice.

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Replying to Brend201:
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By drmrbrewer
20th Jan 2022 14:10

Brend201 wrote:
I would also resist paying it if charged!

For one supplier (of digital services) I have resisted but they are insisting that, without a VAT number, they will have to add VAT to invoices (they claim they have "too many customers" to look at any evidence other than a VAT number (which they can check via this page https://www.tax.service.gov.uk/check-vat-number/enter-vat-details). I assume that, since it's B2B and the customer is based in the UK, this is UK VAT that should be remitted by them to HMRC, rather than German VAT payable to the German authorities?

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Replying to drmrbrewer:
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By rmillaree
20th Jan 2022 16:00

I would be minded to email them complaining that its not acceptable that they dont follow the required vat procedures and advise them that as far as you are concerned you have supplied or are happy to supply them information so vat should not be charged and ask them to deal with the obligations as appopriate in this regard so vat is not charged as the rules dictate . This might not work but i doubt any company would want to be flagged up to any vat authorities so they might back down. It's not clear to me that uk vat number would be used if vat was added although it is possible - you wil probably find out soon enough.

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Replying to rmillaree:
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By drmrbrewer
20th Jan 2022 16:38

The VAT rate in Germany is 19%. But they are adding VAT at 20%, which suggests that it is UK VAT they are talking about, and which I assume they will be handing over to HMRC via a UK VAT registration? So perhaps they are taking the view that HMRC should be getting their 20% whether it's via the supplier or the (business) customer, and they as supplier are obliging in this respect? Otherwise, if the business customer in the UK is not VAT registered then HMRC loses out?

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Replying to drmrbrewer:
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By rmillaree
20th Jan 2022 17:22

It does sound like the vat is ending up with the uk authorities for sure. i would not presume its via a uk vat registration though as there are or used to be other means to get the vat to the uk authorities. It certainly is the case though that more of these overseas entities are now all of a sudden turning up with uk vat numbers. The reasons i will leave to other but its probably vat ioss or vat moss related - obvious when we left eu things changed and its been a right mess since then - old days probably vat moss now possibly uk vat number or ?? i m ight be mising something.

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Replying to rmillaree:
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By drmrbrewer
31st Jan 2022 12:08

This particular (German) company does have a UK VAT number (I checked). So, I suppose that they are within their rights to add VAT to their invoices even if the customer is a UK business (whether or not that UK customer is VAT registered), since ultimately HMRC will be getting their hands on their VAT which is all that really matters? In fact, if the UK business is *not* VAT registered, then HRMC will get their hands on *more* VAT than they otherwise would have done had the German company not insisted on adding VAT? Any flaws in that assessment?

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Replying to drmrbrewer:
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By rmillaree
07th Jan 2022 18:42

"What if the supplier is in Finland, or Germany, or the US. Should they be adding VAT for a sale to UK Ltd Co, and if they do then presumably it's not recoverable by UK Ltd Co?"
ref services
The default is that you need to make clear you are a busines customer and they will not normally charge any vat - they would apply reverse charge procedure on the same principle that applies between you and google. If you don't flag up that you are in business then it will get very messy ref vat.

Rather bizzarely if you then go vat registetered you will have to account for output vat on these supplier payments - you geta matching input vat reduction netting down to nil. These transactiojns may sem nonsensical and that they have no purpose but they do exist and can matter particualrly if you are close to vat registration threshold !

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Replying to rmillaree:
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By drmrbrewer
07th Jan 2022 19:17

That's for "services" only, not "goods"? In my case, I'm paying suppliers in the EU and US for access to APIs (to retrieve real-time live data for use in the apps), and for use of cloud servers and hosting. Is that a "service" or a "good"?

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Replying to drmrbrewer:
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By rmillaree
08th Jan 2022 11:45

"That's for "services" only, not "goods"? In my case, I'm paying suppliers in the EU and US for access to APIs (to retrieve real-time live data for use in the apps), and for use of cloud servers and hosting. Is that a "service" or a "good"?"

The vat treatment here can get complex fast unfortunately - generally for goods they are physical and its all about the borders they cross - so its probably not the case that these are goods.

However the place of supply of services rules are complex and a bit of a nightmare - certain services may not follow the general rules which can massively complicate things - there are some specific examples outlined in section 13.2 of 741A - the whole area is a minefield in that the full exact detail of every line item transaction may need to be looked at with the potential for vat to flip quite easily for random subtle reasons.

The use and enjoyment rules apply in either of the following situations where the place of supply would be:

the UK but the services are effectively used and enjoyed outside the UK
outside the UK but the services are effectively used and enjoyed in the UK
In these circumstances, the place of supply is where their effective use and enjoyment takes place. Where this is the UK, the services are subject to UK VAT.

example

a USA business purchases web-hosting services for its international business, including its UK branch - although the supply is received in the USA, to the extent that it’s used in the UK, it’s subject to UK VAT

https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a

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Replying to rmillaree:
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By drmrbrewer
09th Jan 2022 10:18

So if UK Ltd Co pays a German company for cloud servers (located in a German datacentre), the cost of the service is actually subject to VAT in Germany even though it's a UK Ltd Co buying that service?

And if the UK Ltd Co is paying a Finnish company for use of an API to retrieve real-time data, but the real-time data is actually being retrieved and used in the German datacentre, it's subject to VAT in Germany? Or Finland? Or UK?

VAT is all a bit too complicated IMHO! Perhaps it should be scrapped and replaced with something simpler?!

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Replying to drmrbrewer:
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By rmillaree
09th Jan 2022 10:40

"VAT is all a bit too complicated IMHO! "
You are 100% correct here -
"And if the UK Ltd Co is paying a Finnish company for use of an API to retrieve real-time data, but the real-time data is actually being retrieved and used in the German datacentre, it's subject to VAT in Germany? Or Finland? Or UK?"

Pass - default to checking with supplier enuring you point out your buisness details. Primarily the seller is responsible for ensuring the correct output vat is due. You do have obligations if reverse charge applies and you are vat registeerd.

Unfortunately its more complicated than that now that we havd the the main EC block our rules are no longer aligned with those of the EC block by default (the same treatment may still apply) - their rules will be diverging from ours and all countries may have had their own countries quirky rules anyway - all you can really use 741a for is to get an indication of whether uk vat should apply - beyond that you have to go searching for the counrty where vat is due.

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Replying to rmillaree:
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By drmrbrewer
09th Jan 2022 10:24

Do you have any reference to an official source which explains that an EU company should not add VAT on an invoice to a UK company for supply of a service, even if the UK company cannot provide them with a VAT number (because they are under the VAT threshold in the UK)? I've worn out Google but cannot find anything conclusive.

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Replying to drmrbrewer:
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By rmillaree
09th Jan 2022 10:51

"Do you have any reference to an official source which explains that an EU company should not add VAT on an invoice to a UK company for supply of a service, even if the UK company cannot provide them with a VAT number (because they are under the VAT threshold in the UK)? I've worn out Google but cannot find anything conclusive."

Only in the uk guidance unfortuantely - to the best of my knowledge though - this guidance is matched in the ec block still albeit many ec companies may not have dealt with non vat registered buisness customers due to low vat treshholds in many eu countries.

741 a section 3.1/6.3 clearly outlines the rules

Section 6.3 pretty much confirms that its simply reasonable evidence

Where the B2B rule applies you should obtain commercial evidence showing that your customer is in business and belongs outside the UK. For EU customers their VAT registration numbers is the best evidence that your EU customer is in business. If your customer is unable to provide a VAT number you can accept alternative evidence. This includes certificates from fiscal authorities or other commercial documents indicating the nature of the customer’s activities in their home country. Such evidence should be kept as part of your records.

I know for a fact google are fine applying reverse charge without vat number existing - many businesses deal with google ads and i have never really seen many (none recently) non vat registered uk clients have an issue being incorrectly charged vat when reverse charge applies.

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Replying to drmrbrewer:
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By Trevor Steel
09th Jan 2022 11:20

"Do you have any reference to an official source which explains that an EU company should not add VAT on an invoice to a UK company for supply of a service, even if the UK company cannot provide them with a VAT number "

Try this link to the EU website: https://ec.europa.eu/taxation_customs/where-tax_en. You need to scroll down quite a way, but the last sentence of this extract covers it:

"The place of taxation is determined by where the services are supplied. This depends not only on the nature of the service supplied but also on the status of the customer receiving the service. A distinction must be made between a taxable person acting as such (a business acting in its business capacity) and a non-taxable person (a private individual who is the final consumer).
The concept of a taxable person covers anyone who independently carries out an economic activity, even if that person is not identified for VAT purposes, but it also includes a non-taxable legal person identified for VAT purposes [Article 43 of the VAT DirectiveSearch for available translations of the preceding linkEN•••]."

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Replying to Brend201:
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By drmrbrewer
20th Jan 2022 20:57

Brend201 wrote:
In our case, we just record the net amounts received from Google/Apple as income. It can be difficult to identify the precise amount of their take from the spreadsheets

I'm coming to the same conclusion. I'm finding it impossible to extract anything conclusive from the Earnings Reports. This report has a Google Fee only for some transactions, but not others... I had at first assumed this was for the countries where Google doesn't act as the Merchant of Record and therefore doesn't add/collect VAT at their side, but it seems that for sales to customers in Australia, Google *does* collect/submit VAT for you (https://support.google.com/googleplay/android-developer/answer/138000) but they *also* include a Google Fee in the Earnings Report. So it's not consistent.
For most (all?) European countries, there is no Google Fee in the Earnings Report... just one line with the income for the relevant transaction... you just have to deduce Google's cut from the difference between the value for the same transaction in the Sales Report vs what appears in the Earnings Report?? But even then, it's in a different currency (the local currency for the sale concerned) so what would you record in your GBP accounts?? It's impossible to interpret!!

So you just record the net amount (i.e. the number that actually appears in your bank account, and confirmed in the payment receipt from Google) as the "sale", with nothing recorded as a deduction/fee/expense?

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By JacquiMBurns
13th Jan 2022 14:38

On a piggyback case, does anyone know how Wayfair treat VAT for goods they 'buy' from a VAT registered supplier? They pay what they call 'the wholesale price' to the supplier but the supplier is being less than open about sales or maybe (& more likely) doesn't have a clue!

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