Working from UK, for EU company, getting paid in Euros... VAT?

[peterc2609]

Hi All,

Currently I'm working from home (its a remote gig), for a european company (Poland) and invoicing and getting paid in Euros.

I need to charge UK VAT at 20%.

This all gets paid into a Euro Bank Account.

Whats the score with VAT? Do I only declare it when I convert the Euros to GBP?

Anything else I need to be aware of? As there is 3 months worth of invoices untouched in a Euro account and my VAT return is due.

Open to any creativeness too...

[TheCyclingProgrammer]

Why do you think you need to charge VAT?

If you're providing consultancy/professional services to an EU-based business then the supply is outside the scope of UK VAT.

Instead of charging VAT, you should include a notice on your invoice that the customer is to account for VAT under the reverse charge. Ideally you should obtain some kind of evidence that shows that your customer is in business - their VAT number normally but if they don't have one you can use alternative documentary evidence.

These sales still need to be reported in box 6 of your VAT return, *unless* you are on the flat-rate scheme in which case out of scope supplies are excluded from your flat-rate turnover and should not be reported on your return.

[peterc2609]

I followed this?

Transactions in foreign currencies and VAT - GOV.UK

The thing I didn't mention, I'm working through a UK agency... I guess that makes a difference.

Plus the fact, that the VAT has already been charged and paid and is sitting in a euro account.

[TheCyclingProgrammer]

I followed this?

Transactions in foreign currencies and VAT - GOV.UK

The thing I didn't mention, I'm working through a UK agency... I guess that makes a difference.

It makes a massive difference.

If you're invoicing a UK agency then yes, UK VAT would apply as normal although I don't understand why you would be billing in Euros if that is the case.

Unless you're using cash accounting for VAT, then VAT is normally accounted for on the invoice date so you should covert to GBP following the instructions in the link you posted.

[Fred Bloggs]

Why do you think you need to charge VAT?

If you're providing consultancy/professional services to an EU-based business then the supply is outside the scope of UK VAT.

Instead of charging VAT, you should include a notice on your invoice that the customer is to account for VAT under the reverse charge. Ideally you should obtain some kind of evidence that shows that your customer is in business - their VAT number normally but if they don't have one you can use alternative documentary evidence.

These sales still need to be reported in box 6 of your VAT return, *unless* you are on the flat-rate scheme in which case out of scope supplies are excluded from your flat-rate turnover and should not be reported on your return.

Apologies for a minor side track to the thread, TCP. If the turnover of the UK business is below the UK VAT threshold (and therefore not VAT registrered) and the UK business invoices directly to the end EU domciled client - Then none of that applies? There's no reverse charge VAT etc... to worry about? Thanks.

[TheCyclingProgrammer]

Apologies for a minor side track to the thread, TCP. If the turnover of the UK business is below the UK VAT threshold (and therefore not VAT registrered) and the UK business invoices directly to the end EU domciled client - Then none of that applies? There's no reverse charge VAT etc... to worry about? Thanks.

The reverse charge is still something you need to be aware of even if you're not VAT registered:

1. Supplies you make to other EU businesses are still subject to the reverse charge at their end, regardless of your VAT registration status, although this is their problem, not yours.

2. The value of any purchases you make from overseas that would be subject to the reverse charge in the UK are counted towards your own turnover as if you were the supplier for the purposes of the VAT registration threshold. If you make a lot of high value purchases of services from outside the UK, this could effectively push you over the VAT registration threshold even if your own supplies don't.

[WTFH]

I followed this?

Transactions in foreign currencies and VAT - GOV.UK

The thing I didn't mention, I'm working through a UK agency... I guess that makes a difference.

Plus the fact, that the VAT has already been charged and paid and is sitting in a euro account.

Your accountant should be helping you with this.
As it stands, IF you are a UK company invoicing another UK company, then I'd expect VAT to be applied. That VAT will then need to be paid to HMRC in sterling.

May I check: Are you set up as a UK Ltd, or have you some other arrangement?

[Fred Bloggs]

The reverse charge is still something you need to be aware of even if you're not VAT registered:

1. Supplies you make to other EU businesses are still subject to the reverse charge at their end, regardless of your VAT registration status, although this is their problem, not yours.

2. The value of any purchases you make from overseas that would be subject to the reverse charge in the UK are counted towards your own turnover as if you were the supplier for the purposes of the VAT registration threshold. If you make a lot of high value purchases of services from outside the UK, this could effectively push you over the VAT registration threshold even if your own supplies don't.

Much appreciated TCP. As this is a post-retirement, part time, WFH side hustle, I envisage none or minimal services UK or otherwise. Thank you.