Overview of the place of supply of services rules

By Tolley
VAT_tax_img10

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Overview of the place of supply of services rules
  • Information required by a supplier in order to determine the 'place of supply'
  • Current rules
  • The place of belonging
  • When is a business deemed to belong in the UK?
  • Business establishments and fixed establishments
  • What is the usual place of residence?
  • Is the customer a relevant business person?
  • Securities
  • Checking the customer's VAT registration number is valid
  • Trading through an agency

This document discusses this in detail, together with the rules on cross border supplies; the place of belonging; the usual place of residence; business and fixed establishments; businesses with more than one establishment; relevant business person; checking for a valid registration number; and trading through an agency.

There are special rules governing the VAT treatment of supplies of services. This guidance note will explain the general rules regarding the 'place of supply' of services and the correct VAT treatment of those services.

Click here to view pdfHMRC Notice 741A ; De Voil V6.114 (subscription sensitive)

In order for the supplier to determine the correct VAT treatment of the services provided it will be necessary for the supplier to have answers to certain questions that will assist with determining the most appropriate VAT treatment.

Please use this link to Notice 741  for the rules in force before the 1 January 2010

Information required by a supplier in order to determine the 'place of supply'

The supplier needs to have the following information in order to determine the correct VAT treatment of the supply:

  • what type of service is being provided?
  • where is the customer located?
  • if the customer is in another EU member state, is the customer registered for VAT or is it a 'relevant business person'?
  • if applicable, where are the services physically provided?
Current rules

The VAT rules relating to cross border supplies of services were simplified with effect from 1 January 2010. Most 'general' services now come within the scope of the 'reverse charge' mechanism, which means that a supplier will not be required to charge VAT on most services supplied to a 'relevant business person' established in another EU member state or outside the EU. The relevant EU and UK legislation states the following:

  • where the supply is to a 'relevant business person', the place of supply

More on Cross border supplies of services: