Online shopping e-commerce

VAT and online trading: Part 2 – Services


Neil Warren highlights some issues with selling electronic services on the web and how to deal with the place of supply rules.

28th Aug 2020
Independent VAT Consultant
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In my previous article in this series, I discussed how you can decide if a website owner was acting as an agent or principal in selling goods or services over the web.

I will now consider the VAT issues for a UK business selling services on someone else’s online marketplace, focusing on electronically delivered products, untangling the place of supply rules to get things right.

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Replies (3)

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By Jas28
01st Sep 2020 09:55

I am confused by the example.
If we delete item 3, as it is outside the scope, and focus on items 1,2,4 and 5, the gross sales add up to £65,000. Out of this figure, the client pays commissions and fees totalling £24,000 (items 4 and 5). Therefore, he only receives £41,000 after deduction of commissions and fees, but his turnover is £89,000. Is this correct? Or have I misunderstood the example?

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Replying to Jas28:
By accountantccole
01st Sep 2020 14:59

Reverse charge rules apply. The supplier effectively gets you to declare their income on your VAT return, so it gets included in your taxable turnover figure.

If you are VAT registered it normally goes in and out on the returns

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Replying to accountantccole:
By Jas28
01st Sep 2020 15:04

Thanks for the explanation.

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