VAT on interco recharges for services EU and Non-EU

[simontrent]

Hi all

The company I work for has recently opened service centres in France and Turkey. We are wanting to book customer orders onto the UK entity, and then use the other centres to perform the work. It has been suggested that we recharge the costs of these entities to UK. Does anyone know if the Turkey entity would need to include VAT on these recharges? Would this be recoverable in UK?

If so, is there another way to do this that is VAT efficient.

Thanks

Simon

[Marie Stein]

Hi Simon

My apologies for the delay in responding. You might have noticed that the website has been “spammed” quite regularly over recent weeks and with the Christmas holidays, I’ve just managed to get it sorted out.
Unfortunately I can’t really help you with this query as you haven’t given me enough information to even try to point you in the right direction. The most important fact that I need is the nature of the that your company provides to its customers as it is this that will decide on the VAT liability and whether or not the UK entity could recover VAT charged by the Turkish entity.

Plus the VAT treatment would differ according to whether the charges are “inter-company” or between separate companies in each country. The key technical issue is the “place of supply” rules, which are many and complicated. I’ve posted a short explanation of the rule here https://vatexchange.co.uk/node/325 with a link to the HMRC VAT Notice 741a which explains how the rules work in detail and you may be able to work out the answer yourself

This is the sort of issue that would probably require some formal, detailed advice and I’d be happy to help through my consultancy services if you want to send me an email to enquiries@vatexchange.co.uk . But if you’d like to post a bit more information here on the forum, I can give you a few general pointers.

Marie

[Author]

Posts