Commentary

V7.269 Place of supply of services—basic principles and the reverse charge

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.269 Place of supply of services—basic principles and the reverse charge

Part V7 Tax planning | Commentary

V7.269 Place of supply of services—basic principles and the reverse charge

The intention of the new rules introduced on 1 January 2010 and 2011 was to simplify procedures and to ensure that any VAT payable in relation to a supply is payable in the country where the service is 'consumed' The aim of this section is to look at the basic rules on the subject that can be applied in the majority of cases to arrive at a sensible conclusion regarding the VAT position of the service being performed.

The phrase 'place of supply' is crucial because this rule establishes the country within which the particular supply takes place and consequently the jurisdiction in which any resulting VAT will be due. If the place of supply is deemed to be in another EU country outside of the UK, then the VAT due on that supply will be payable in that country – not the UK. If the place of supply is outside the EU, then no EU VAT is payable, although the country in question may have its own indirect tax system similar to VAT with issues to consider. In most cases, the VAT due in other EU countries will be paid by the customer by applying the reverse charge, but on other occasions, the UK supplier may need to register and account for VAT in that particular country. From 1 January 2015 it will be possible for UK suppliers of broadcasting, telecommunications and electronic services to consumers in other EU

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