If you’re supplying services that are treated as supplies from the UK to consumers outside the UK, your services are supplied where your customer belongs and so are outside the scope of UK VAT. This means that VAT must be added to your product prices and passed on to your customers, or you must pay the VAT yourself. If your customer is based outside the UK, you will not charge UK VAT on your sales invoices. Do I need to charge Goods and Services Tax (GST) on sales to overseas customers? This means that if you are hiring goods to a business, the place of supply is treated as being where the customer “belongs”. Fast Approaching - September VAT Reclaim Deadline. Implications of the VAT … Here, VAT at 5% is levied on the supply of spare parts. This detail should be acknowledged on the invoice. Usually, you won’t need to charge VAT to overseas business customers. These rules also take into account the nature of the service, and whether you’re supplying the services on a B2B (business to business) basis, or as B2C (business to customer). The rules continue to apply broadly as they did previously, but subject to some changes shown below. A VAT registered supplier must charge VAT on all local supplies of goods and services within UAE.VAT collected from the customer is called output tax and it must be reported in the VAT return. Registration. If customer is VAT registered they have to account for reverse charge VAT in their country; If customer is VAT registered include sale on an EC Sales List. If you’re selling services to a foreign customer who is VAT-registered, you don’t charge VAT, but they pay the sales tax in their own country. I am to provide services from my UK based company (which is VAT registered) to a customer in continental Europe (within the Euro zone). If services are supplied cross border this may trigger the reverse charge procedure for the business customer and no charge to Irish VAT on the outgoing invoice. UK VAT may need to be charged on services performed in France or to clients based in France, depending on the type of service supplied. When providing services to overseas customers, you may fall under the rules of Article 31 which allows zero-rating of certain services. For B2B e-services to non EU customers, again the supply is usually subject to VAT in the country where the customer is established and therefore outside the scope of UK VAT. Industry insights . The GCC (Gulf Cooperation Council) comprises of the States of UAE, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar. The supply of services to customers in the EU from 1 January 2021 is treated the same as those to any customer outside the EU. I will charge a fee based on time spent on the work. If you are a GST registered company, you are required to collect GST from your customers for the goods and services rendered by you and then pay the tax collected to tax authorities. If you incorrectly identify your customer and do not charge VAT, you will be liable to pay the VAT. These services supplied to consumers inside the EU were previously VATable. Businesses will need to obtain verified information, such as credit card pre-authorisation that can verify the address associated with the card number, to supply services to consumers (B2C) without VAT. Charging VAT when hiring equipment to overseas customers Business to business In the majority of cases the hire of goods and equipment is covered by the general rule for the supply of services. The VAT treatment will be covered by the VAT ‘place of supply’ rules. If you’re selling services to a business customer who provides you with an EU VAT ID, you generally do not need to charge VAT. You may also incur interest and penalties in the event of a Revenue audit. When it comes to VAT on services, as a general rule following Brexit/end of the transition period, sales of cross border purchases of services from one business to another (B2B) remain subject to tax in the country of the customer (with some exceptions). On the VAT return you show it in box 6 only and you will also need to file an EC Sales list return and use indicator 3 for Services. Before January 1, 2010, if a U.K. company supplied services in the United Kingdom to either a business-to-business (B2B) or a business-to-customer (B2C) customer, appropriate U.K. VAT was required to be charged on the work. “Rules that came into force at the beginning of 2010 changed the VAT landscape considerably for some UK businesses with overseas customers,” explains Steve Crouch of online contractor accountant Crunch. These include fees for professional services conducted in Australia such as fees for an Australian educational institution. Therefore, the tax is generally accounted for as reverse charge in the destination country by the recipient of the service. The services should be supplied to a recipient who does not have a place of residence in an implementing state and who is outside that state at the time the services are performed. For services made to a non-business customer (B2C) you should charge UK VAT unless your services are covered by an exception to the general rule (refer to place of supply above) You may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales. VAT on services supplied to overseas customers. N/A. What are digital services? Once the tax impact has been identified for the transaction, the same needs to be considered at the time of raising invoice. The services are two be in two parts. Standard Rate of VAT at 5%: A-One Spare Ltd based in UAE supplies spare parts to a customer who is based in the UAE. As previously stated, here also, there can be an exception to this if a Member states decides to implement the ‘Use and Enjoyment’ rule and applies VAT on a service ‘used and enjoyed’ on its territory. Can an overseas company be included in a VAT group? If the customer is a B2B customer, then the same rule as above is applied i.e. Warning. I know, ordinarily, recharged expenses would have a VAT charge if in the UK. However, different VAT rules apply to services supplied to overseas customers, or in connection with land located overseas. South African Entities. The place of supply is France, the place where B Ltd is established. 4th Sep 2020 . Guide to overseas transactions on VAT returns How to calculate the reverse charge on VAT returns when buying services from abroad . Didn't find your answer? For example, if you charged S$100 for your services to a customer in Singapore, you must invoice your customer S$107 (S$100 for your service plus 7% GST). Services you supply to a business aren’t subject to VAT where it’s based overseas. 24th Aug 2020. In instances where the VAT payable is zero, this should also be noted on the invoice. Billing International Customers – Generally, UK organizations providing services to overseas customers should find getting the correct UK VAT treatment easier, as there is … When a service is sold to a customer not registered for VAT, VAT is charged at UK rates. However, the VAT that you collect from consumers for goods or services must be remitted to the government in order for you to be in compliance. These services supplied to consumers inside the EU were previously VATable. When a service is provided to a person whose place of establishment or fixed establishment is outside UAE, it becomes an export of service. But if the supply is to a non-business customer based in the EU, VAT should be charged. Client is USA based, B2B general rule applies and supply of services is outside scope and no output VAT should be charged on the invoices. You must confirm the status of your customer (business or private customer) when supplying services abroad. Businesses who supply digital services to overseas customers may be unaware of the potential VAT obligations that exist in countries around the world due to changes in the place of supply of digital services. It will need to register for VAT if the value of these services (and other taxable income - coffee machine sales?) In this post, we’ll look at a few examples to show how VAT should be charged when you’re supplying services abroad - or supplying services here in the UK on behalf of an international client. VAT obligations of Irish traders when supplying services abroad. RELEVANT PROVISIONS OF LAW: The following services have been identified as ‘Electronic services’ as per Article 23 of the Executive Regulations of UAE VAT Law: Supply of domain names, web-hosting and remote maintenance programs and equipment; Advertisement. XYZ Ltd does not charge Irish VAT. Since January 2010, the basic principle of business- to-business (B2B) sales of services is that the VAT treatment depends on where the customer is based. Search AccountingWEB . You can generally supply services to non-EU private customers free of VAT by providing proof that the customer is based outside of the EU. If you’re selling services to an EU customer without a VAT Identification number (ID), you may need to charge UK VAT unless a specific exemption applies.⁸. Part 1 involves me sitting at my desk in the UK writing a report and then posting it off to the customer overseas. XO Africa argued that its services should be zero rated in terms of the VAT Act as it did not supply or render the local services directly to the foreign tour operator or its customers. If the UK customer is not VAT registered because it only or mainly has exempt sales, then the overseas services it receives will form part of its taxable sales. The difference between these sums is reclaimed or paid to the government. Should I charge VAT on services to Asian customer? XYZ Ltd, an Irish company, supplies a service to B Ltd. B Ltd is established in France and does not have a fixed establishment anywhere else. Under VAT in UAE, services are defined as anything that can be supplied other than goods. However, to be zero-rated several conditions must be met. For some services the supply is deemed to take place in a different country from where your customer is based. Instead, B Ltd self-accounts for the French VAT in its own VAT return. Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. Your customers will pay VAT on the services received at the applicable rate in their country (using the reverse charge procedure). However, what exceptions do you need to be aware of? If you’re supplying services that are treated as supplies from the UK to consumers outside the UK, your services are supplied where your customer belongs and so are outside the scope of UK VAT. VAT return: include the net value in box 6; Special case where place of supply is in the UK: Sales to international organisations (e.g. Search AccountingWEB. However,I cannot find anywhere if this is still the case for an overseas, non EU client. SAP Concur. Myriad Associates. GST (Goods and Services Tax) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia and also on most imports of goods. Making Tax Digital - Deadline Extended until 2022 . Be aware that there are several important exceptions to the rules. The supply of services is outside the scope of UK VAT, although there are some exceptions to this general rule. Check the Taxman’s guide for details of these. exceeds the VAT registration limit (£68,000 etc.) If you’re registered for VAT and you’re selling services. General B2B rule. Any person, which includes a non-resident company, who carries on an enterprise and whose value of taxable supplies exceeds, or is likely to exceed ZAR 1 million in a 12-month period. Services with place of supply outside EU: Outside the scope of UK VAT. where does the customer belong. Who is required to register for South African VAT? The ‘reverse charge’ calculation often causes confusion. It applies when a UK business buys services from abroad. 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