Should we invoice to Cyprus with or without VAT

[Alexandra Ryvkova]

Hello everybody!

We are an advertising company registered in the UK and make an advertisement for a Cyprus company. More of that, there are two cases:
1. It is a digital advertisement
2. It is a non-digital advertisement

So, should we issue invoice with VAT or without it? A Cyprus company has a VAT number, of course.

 

[Scalloway]

You need to work out where your place of supply is.

https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-services

 

[Alexandra Ryvkova]

You need to work out where your place of supply is.

According to the link you gave, the place of supply of cross-border digital service (like e-advertisement) is the place where the consumer of that service is normally resident. So, it is Cyprus.

 

[Hahnbeck]

If the people will be viewing the advertisement in the UK then the UK is the place of supply, so invoice with UK VAT (20%) added

 

[Alexandra Ryvkova]

If the people will be viewing the advertisement in the UK then the UK is the place of supply, so invoice with UK VAT (20%) added

But EU VAT Guide says, it is 0% (reverse charge VAT) in case of digital services!

 

[AbsoluteVAT]

The supply will fall within Article 44 of the EU VAT directive, commonly referred to as the B2B general rule. This states that where the supply of services is made by a business to a business in another member state, the place of taxation will be the country in which the business customer is established, i.e. Cyprus. The customer will account for VAT in Cyprus.

The fact it is digital services is more relevant for B2C transactions.

 

[Alexandra Ryvkova]

The supply will fall within Article 44 of the EU VAT directive, commonly referred to as the B2B general rule. This states that where the supply of services is made by a business to a business in another member state, the place of taxation will be the country in which the business customer is established, i.e. Cyprus. The customer will account for VAT in Cyprus.

The fact it is digital services is more relevant for B2C transactions.

First of all I'd like to thank you for such a comprehensive answer. Does it mean we should issue our invoices without VAT? What exactly should we write in VAT line?

 

[AbsoluteVAT]

Correct, as a UK business supplying advertising services to a Cypriot business, no UK VAT should be charged, and the narrative 'REVERSE CHARGE' should be displayed. I would also suggest including the customers VAT number.

 

[Alexandra Ryvkova]

Correct

Thanks! And in case of ordering physical advertisement inside of the UK (a few billboards in London for example)? Should we charge VAT in our invoices to a Cypriot business in this case, or the same "Reverse charge" narrative should be displayed?

 

[AbsoluteVAT]

Hi Alexandra

The same VAT treatment will apply, even where the advertisement is in the UK. So the 'REVERSE CHARGE' narrative.

 

[youngtrepreneur]

You need to invoice them the gross price (net + VAT).
If your customer is VAT registered, which you've said it is, you need to put on your invoice that it is zero-rated because of the European VAT reverse charge.
You need to know their VAT number and put it on the invoice.

You will also need to complete an EC Sales List and VAT MOSS return.

 

[AbsoluteVAT]

The MOSS return is solely for B2C supplies of digital services to EU based consumers. As this is a B2B supply it is not required. The sale value will be shown on the 'normal' UK VAT return plus ECSL.