VAT when working abroad through a UK agency

[Bunk]

Morning folks,

I've started a gig in Germany recently, through a UK recruitment agency. I had assumed I would just invoice them as usual, as my UK ltd company is based in the UK and so is the agency. However, I've now started reading up on "place of supply" and I'm not so sure anymore. Should I add 17.5% VAT as both parties are based in the UK, or does the fact that the services are supplied in Germany mean I add 0% VAT?

If anyone can point me to a post that answers this, please do, but the only ones I could find were about 5 or 6 years old.

Ta muchly in advance.

[lambretta008]

Hi,

I hope you don't mind me "hijacking" this post, but I also have a similar query in as much as my company is UK based, my services are provided in the Middle East, but my contract is with a UK based agency.

Should I therefore be invoicing VAT as well?

[nodric]

VAT is not chargeable on cross border invoices. i.e. If you, a VAT registered company, sell something to another VAT registered company who is in a different EU country then no VAT is chargeable. You must display both VAT numbers on your invoice. You then mark the VAT as zero rated.

So, if the supplying company is in the UK, and the receiving company is in Germany. No VAT is chargeable.

However, if you are invoicing a UK Agency for the work, then you MUST charge UK VAT at the prevailing rate. This gets messy if the contract is in Euros, as VAT must be expressed in GBP.

If you subcontract (and that's what we do) through a UK Agency, then you actually supply your services to them, and not the end client. The Agency supplies the services to the end client. VAT is chargeable in the UK.

The test to apply is 'who pays your invoice'?

If you use a management company to do your invoicing, that is based in another EU country then VAT can be avoided altogether.

Example. You are UK based. Your management company is based in Switzerland. Your Agency is based in the UK.

You invoice the management company in Switzerland. No VAT is chargeable.

The management company invoice the Agency. No VAT is chargeable.

You receive the funds net of VAT, less the management companies fee. This is all legal.

Benefit!!! You can claim your input tax. i.e. You still get refunds on all your purchases in the UK. You become a net receiver of VAT.

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