Value Added Tax

Place of supply of services ― passenger transport

Produced by Tolley
  • 09 May 2022 15:25

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

  • Place of supply of services ― passenger transport
  • What is passenger transport for the purposes of the place of supply rules?
  • What is the place of supply of passenger transport services?
  • Cruises not picking up or dropping off passengers in the UK
  • What is the place of supply of on-board catering and other services?
  • On-board catering
  • Gaming machines
  • On-board trading concessions
  • How are registration and VAT accounting requirements affected by passenger transport services?
  • Practical points ― passenger transport and the place of supply

Place of supply of services ― passenger transport

This note provides looks at the special place of supply services rules which apply to passenger transport services. It also looks at the place of supply of on board catering (and other services supplied on-board international journeys).

For an overview of VAT and international services more broadly, see the International services ― overview guidance note.

For the zero-rating (and reduced-rating) for passenger transport supplied in the UK, see the Liability ― passenger transport guidance note.

For in-depth commentary on the legislation and case law relating to the place of supply of passenger transport, see De Voil Indirect Tax Service V3.189.

What is passenger transport for the purposes of the place of supply rules?

VAT law says the special place of supply rules for passenger transport cover the transportation of:

  1. passengers

  2. any luggage accompanying passengers

  3. motor vehicles accompanying passengers

VATA 1994, Sch 4A, para 2(1)

For the purposes of the place of supply rules, a pleasure cruise (including those cruises that are wholly or partly for education or training) is also regarded as passenger transport.

Most, but not all, passenger transport is zero-rated when the place of supply is the UK. A number of specific examples of what is and is not passenger transport are therefore set out in the Liability ― passenger transport guidance note. This note also describes ‘incidental services’ that HMRC treats as forming part of a single supply of passenger transport services.

Note that the hire of a vehicle without a driver is not regarded

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