Place of supply in a nutshell
The place of supply rules dictate where a transaction is to be taxed. Different place of supply rules apply to supplies of goods and services.
This overview note provides brief details on the differences between the place of supply rules for goods and services.
Why are these rules important?
An understanding of these rules is vital for ascertaining where VAT needs to be accounted for. The place of supply and associated VAT treatment of the goods and services provided may also determine whether the supplier or the customer is required to account for any VAT due.
If the place of supply is in another country, the supplier may be required to register for VAT in that country, unless the liability to account for VAT is transferred to the customer.
What information to you need to work out the place of supply?
The following needs to be determined in order to work out the place of supply:
- is a supply of goods or services being made?
- if the supply is of services, what is the exact nature of those services?
- is it a business to consumer (B2C) or a business to business (B2B) supply?
- where is the customer located?
- in the case of goods, where are the goods located at the time of the sale and where do those goods go to?
Once the supplier has this information, they can determine the place of supply using the rules explained below.
Is there a general rule for the place of supply?
Yes, there is a general rule, and this is the fallback position and determines the place of supply if the supply does not fall into one of the exceptions explained below.
The general rule is that the place of supply is the country where the goods are located at the time of supply (ie usually when they are sold to a customer). This may mean that a supplier is required to be VAT registered in another country (for example, if a UK business makes sales of goods from a stock warehouse in France).
The general rule for B2B supplies is that the place of supply is the country where the customer is established. Responsibility for accounting for any VAT due on these supplies is generally transferred to the customer, who accounts for VAT using the reverse charge.
For B2C supplies of services, the place of supply is generally the country where the supplier is established.
What are the exceptions to the general place of supply rule?
There are a number of supplies where the general rule does not apply.
If goods are installed or assembled, the place of supply is the country where the goods have been installed or assembled.
Intra-EU B2C supplies of goods are subject to the distance selling provisions. The place of supply is where the supplier is established; however, once the relevant threshold has been breached in the customer’s member state, the place of supply becomes the customer’s member state. Suppliers must register for VAT in the customer’s member state. With effect from January 2021, the distance selling provisions only apply in Northern Ireland (and will in any case be amended with effect from 1 July 2021).
For services these include (this list is not exhaustive):
Services relating to land and property. The place of supply where the land/property is situated
Restaurant and catering services. These are supplied where they are physically carried out.
Certain services are subject to ‘use and enjoyment’ provisions. The place of supply is where the services are used and enjoyed.
Supplies of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events. The place of supply is where the event physically takes place