Zero-rated VAT / reverse charge? (services within EU)

Discussion in 'Accounts & Finance' started by johnas, Feb 6, 2014.

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  1. johnas

    johnas UKBF Newcomer Free Member

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    Dear all,

    Simple situation, complex problem:

    Myself - an owner of Ltd company, based in UK, registered for VAT. Supplying IT services+consultancy for:

    Customer - a Ltd company outside UK, within EU, registered for VAT


    What do I specify in my invoice to them, next to the netto X amount in € ? (it clearly has to indicate VAT 0% hence £0.0 as I presume)

    What is reverse charge VAT? Do I need to do that? The customer might do that. How does that impact me?

    What will be the amount appearing in my company's bank account?

    What do I have to declare upon VAT tax return?

    I'm hiring an accountancy company, but they are not too quick/detailed in explaining all of the above to me. So far I've got that I charge my customer 0% VAT, but nothing about reverse-charge procedures.

    All these questions in my head, hope you'll assist me,


    With thanks in advance,
    Johnas
     
    Posted: Feb 6, 2014 By: johnas Member since: Nov 26, 2013
    #1
  2. teddys

    teddys UKBF Enthusiast Free Member

    855 198
    First up, you need to decide the place of supply of your services. In order to find that out we need to understand what sort of IT consultancy services do you provide; are these 'electronically supplied services'?

    If the place of supply is held to be in the country where your customer is based then the supply is out of scope of UK VAT and shouldn't be carried on your VAT return. If the supply is taxable and you do need to zero-rate the supply, that is all you need to do. Reverse charge is something that your customer will need to take care of.
     
    Posted: Feb 7, 2014 By: teddys Member since: Apr 30, 2011
    #2
  3. johnas

    johnas UKBF Newcomer Free Member

    4 0
    Thank you for the prompt answer.

    Supply is electronically supplied services.

    the place of supply is held in customer's country

    How do i know if i need to zero-rate the VAT or not?

    Cheers,
     
    Posted: Feb 7, 2014 By: johnas Member since: Nov 26, 2013
    #3
  4. KM-Tiger

    KM-Tiger UKBF Legend Full Member - Verified Business

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    Yes, as said, there are special rules for electronic suppy. The place of "effective use and enjoyment" determines the place of suppy, irrespective of the location of the customer.

    When I was looking into something similar, I found this flowchart handy.
     
    Posted: Feb 7, 2014 By: KM-Tiger Member since: Aug 10, 2003
    #4
  5. johnas

    johnas UKBF Newcomer Free Member

    4 0
    Wonderful chart, thank you KM-Tiger!

    Please explain to a rookie like me: the chart points to:
    "Services are outside the scope of UK VAT. Customer accounts for any VAT due"
    • Should I invoice my customer with VAT 0%?
    • If so, then what VAT is due then for the customer to account for?
    Thank you for you patience (you will need it :) until I get into the accounting terms/lingo
     
    Posted: Feb 7, 2014 By: johnas Member since: Nov 26, 2013
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