VAT for the supply of professional services to an end-customer in the EU

rikesh

Hi all. Quick question around the supply of professional services to an end-customer in the EU. In this scenario, Company A (UK based and UK VAT registered) supplies services to Company B (UK based and UK VAT registered) and Company B resells these services to Company C (EU based). I understand that Company B does not charge UK VAT to Company C. However, what is the UK VAT situation between Company A and Company B?

Krisso

Unless I am being stupid (it has been known) the supply from A to B will be subject to normal UK VAT. As for between B & C, if you are supplied a tax rate for the EU domain being supplied then this will need to be recorded on your invoice and will be subject to EU tax for company C to deal with.

rikesh

Thanks for the reply.

According to the UK gov website, if the 'place of supply' is outside of the UK, VAT is not chargeable. So I would expect Company A not to charge Company B any VAT because the services are ultimately to be supplied in the country of Company C (European Union).

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

Or am I missing something?

Krisso

Supply A to Supply B is domestic, VAT is applicable as the supply is domestic. Supply B to C will be subject to european vat so the invoice should show an EU vat number if there is one and C would need to include this on any return but would not be billable as VAT in UK. This would however need to include the EU Vat number of C on supplier B's invoice

Your example is showing 3 companys and A is not supplying C direct so there would be chargable vat between A and B

rikesh

Ok, understood. In this case, would Company B be able to reclaim the VAT paid to Company A in its VAT return?