Charging VAT for supplying services to EU

[Scooteruk]

I wonder if someone could please offer me some guidance. I am VAT registered Ltd company in the UK supplying software testing service to various clients in the UK.

I have now secured a contract with a client in Germany who is also a VAT registered organization. All their work will be done in my UK office. No product will be developed for or supplied to the customer. It will just be a software testing service only. I will be visiting them once a month for a couple of days for update / meetings etc.

I need some guidance on 2 things:

1. When I send them a monthly invoice, should I charge them VAT at standard 20% or should I charge them VAT at 0%. On GOV.uk site, I seem to be getting mixed messages about this so I am lost!

2. My business has a GBP bank account in the UK and I also have a personal Euro account in Germany. The agreement with the client is in terms of Euro. Therefore should I take their Euro payment in my German (Euro) account and them transfer that money back to my LTD company account in the UK myself or should I ask the client to pay invoices directly to my UK GBP account.

I would be grateful for any clarification on this.
Regards

 

[Scalloway]

1. You need to look at the place of supply rules.

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

2. Paying company money into a personal account can have tax disadvantages.

 

[Nico Albrecht]

B2B within the EU you need to obtain their Vat number and keep records. Check it here for eu countries. http://ec.europa.eu/taxation_customs/vies/ Once you validated it you charge 0% Vat to them and declare it on your vat return online. B2C to another European country you must charge 20% VAT
They must pay in your GB account via iban and vat must be taken off before the payment. You cannot invoice them with vat and later refund it. It must be done before payment. Hope that helps.

 

[Scooteruk]

Thanks for your reply. Obviously I am not an expert like you so I want to clarify:

My situation is a B2B within the EU. I have used the link and VAT number has been validated.

So now when I send them a monthly invoice,
1. I show VAT at 0%? and
2. They only pay me the NET amount of the invoice in my GBP account?
3. And I display mine and their VAT numbers on the invoice?

Are these 3 statements correct?
Thanks again for your help.

 

[Nico Albrecht]

point 1 correct 0%
point 2 correct let them choose euro and the bank converts it to gbp
point 3 same as with any UK transaction but feel free to add their VAT number as well

I would recommend to check their vat number prior to any invoice you send out and print a copy for your records. It will have date and time you checked it to cover you. Do the checks on a regular base and keep records of it in form of a print out. For vat returns online there is a section for eu sales to declare. All pretty straight forward only thing you cannot do is B2B charge vat they pay in full and later want the vat refunded. I believe this is not possible and must be solved prior payment.

 

[Nico Albrecht]

Please check here as: https://www.gov.uk/guidance/vat-how...at-rules-to-use-when-charging-vat-on-services .We supply services to other uk countries and i talked to HMRC and thats how they advised me to do.

 

[Scooteruk]

Thank you very much for your time and for the clarification. Regards

 

[Page]

I think - but aint no expert that ...

You need their VAT number and on the invoice
You supply them not at 0% - though it is - but with a VAT code you set up for this which then is at 0%
As opposed to Exempt or Zero rated

Hey why not phone their help line and speak to someone whom knows nothing about it or anything else to do with VAT

 

[Mr D]

Hey why not phone their help line and speak to someone whom knows nothing about it or anything else to do with VAT

You've dealt with Her Majesty's Infernal Revenue Service before I see.