Vat treatment for an EU Country that pays through it’s UK company

[Anonymous]

Hi

I supply marketing services to companies both in the UK and abroad. I am not sure which income I need to take into account for Vat Registration purposes. My turnover is nearing the £73,000 mark but should I include sales to non EU countries in my calculation?

Also, I have a client in France who pays me through their UK company, should I charge VAT on these invoices if and when I have to register for VAT?

Thankyou in advance

[Marie Stein]

Hi Molliejo

In principle you only include the value of services made in the UK for VAT registration purposes. Marketing services would normally follow the “general rule” which means that the supply takes place in the customer’s country – i.e. outside the UK- when the customer is an EC VAT registered business or anyone belonging outside the EC. So services supplied to customers in non-EC countries don’t have to be included.

I assume, therefore, that you won’t need to register so your question query about your French client is irrelevant! However in the event that you end up being registered at some point and this same issue arises, the simple answer is that it shouldn’t make any difference to the VAT liability who PAYS for a service which is covered by the “general rule”. So if a UK company pays on behalf of a French client who is registered for VAT, then in principle the supply is still outside the scope of UK VAT and you wouldn’t have to charge UK VAT on the invoice. The French customer would account for reverse charge VAT on its French VAT return instead.

Marie

[Author]

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