Where will VAT be paid and where to be registered?

[DLOT]

Hi,
I need to share opinions on the following issue before contacting any on line payment organization:

I am in the process of setting up an on line service for UK, Spain and Italy.
At the moment my company is a sole trader registered company.

My big confusion is on the following:
1) I registered the company in UK when I was leaving there.
2) I have now moved back to Italy but the company is still registered in UK although of course Inland Revenue has been notified of the move.

Now, if I have a Spanish customer which needs to pay for my service and I will be using one of the credit card on line payment systems, where the VAT is going to be paid?
1) In Spain because the customer who receives my service is Spanish?
2) In UK because the company is registered in UK and the VAT is applied in the country where the company is registered?
3) In Italy because I am now resident in Spain and being a sole trader company it is like saying it is just me?

Please note I do not provide goods to the customers but WEB services.

Many thanks in advance.
I hope you can help me

DLOT

Dani

 

[Ozzy]

Working on the basis that you intend to keep the company as a UK company and that you are VAT registered then...

When invoicing UK companies you charge them VAT at the UK rate.
When invoicing companies in Spain and Italy then...
If you have their VAT/TAX number then display that on your invoice to them alongside your own and do not charge them VAT.
If they are not VAT registered or you do not have their VAT number then you charge them VAT at the UK rate.

That is my understanding of it but worth double checking with HMC&E (insert usual disclaimers!)

 

[David Shephard]

Dani,

Ozzy is right in every respect, however one important fact has been omitted.

If you are satisfied your EEC customer IS VAT REGISTERED, and has supplied you with their Vat Registration number, you do not need to add 17.5% vat to your invoice. HOWEVER, for Vat purposes, you will still have to pay the 17.5% Vat on your invoice to the UK authorities, because your EEC customer will be claiming back Vat at their appropriate rate from their Vat Authority.

David Shephard

 

[Ozzy]

If you are satisfied your EEC customer IS VAT REGISTERED, and has supplied you with their Vat Registration number, you do not need to add 17.5% vat to your invoice. HOWEVER, for Vat purposes, you will still have to pay the 17.5% Vat on your invoice to the UK authorities, because your EEC customer will be claiming back Vat at their appropriate rate from their Vat Authority.

Now I didn't know that! ...and I did phone HMC&E for clarification and they didn't tell me that either.
Good job you pointed that out as I have just started exporting some services to abroad using the principle above and my first VAT return that will cover this service is due at the end of this month!

 

[David Shephard]

Ozzy,

Thanks for the post. Yes, unfortunately it is true.

If you are using an accounting package to prepare your monthly accounts and Vat Return, check the settings, and look for the tax code to use for posting EEC Sales, this will make the calculation automatically for you, and keep your Vat Return correct. It will post the amount of EEC Sales into your Vat 100 Box 8. If you use Sage the correct tax code I believe is T4 for EEC Sales, but you need to enter the customers Vat Number in international format, otherwise Sage will reject it.

David Shephard

 

[David Shephard]

Ozzy,

Sorry forgot some other info. Enter your Client's Vat Number in their Customer Accounts profile set up, where it asks for Vat Number, this must be proceeded by their Country Identifier such as UK for UK, or D for Germany. Hope this makes sense.

David Shephard

 

[David Shephard]

Ozzy,

sorry correction, GB for UK

David Shephard

 

[Alpha]

Ozzy

You do not pay over vat on goods/services supplied to EEC member states although the supply is recorded in Box 8.

I think there is a mix up regarding supply and acquisition.

Providing you hold a valid VAT registration number of the company you are supplying the supply is ZERO rated therefore no vat.

If you make an acquisition(customs speak for purchase) you have to declare the vat value in both boxes 2 and 4 which effectively cancel each other out therfore no vat is paid/received in respect of that transaction.

Hope this makes it clearer

 

[Ozzy]

OK, sorry but I'm getting confused...

I have a client in a EU country to buy's company formations from my in large numbers. the Companies House fee is zero rated anyway, but what about my service charge. I've been going down the route where I do not add VAT to that charge and their VAT is displayed alongside their details and my VAT number on the invoice.

According to HMC&E what I doing is correct as my client pays the relevant TAX their end by declaring the purchase to their TAX office.