Place of supply of services ― the general rule, relevant business persons and belonging

Produced by Tolley

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

  • Place of supply of services ― the general rule, relevant business persons and belonging
  • What is the general rule for the place of supply of services?
  • Is the supply of services B2B or B2C?
  • What if a person is in business but not VAT registered?
  • What if a person has business and non-business activities?
  • Checking the customer’s VAT registration number
  • Where does a business belong?
  • What is a business establishment?
  • What is a fixed establishment?
  • Can a subsidiary create a fixed establishment for its parent?
  • More...

Place of supply of services ― the general rule, relevant business persons and belonging

This guidance note looks at the general rule for the place of supply of services. It also considers the following important points which are frequently of relevance to the place of supply of services:

  1. when a supply of services is B2B or B2C for the purposes of the place of supply rules

  2. the concepts of belonging / establishment (which are often important when working out the place of supply)

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

For in-depth commentary on the legislation and case law, see De Voil Indirect Tax Service V3.182 (belonging and B2B / B2C transactions) and V3.183 (the general rule).

What is the general rule for the place of supply of services?

The general rule is the default way to determine what the place of supply of services is for VAT purposes. There are a number of overrides (or exceptions) to the general rule (see the International services ― overview guidance note). However, in the absence of any of these exceptions, the general rule should be used to work out the place of supply of services.

The general rule is essentially in two parts; one part applies to business to business (B2B) transactions and the other applies to business to consumer (B2C) transactions. The place of supply position for each is summarised in the table below:

Type of supplyPlace of supply
B2Bwhere the customer belongs
B2Cwhere the supplier belongs

VATA 1994, s 7A(2)

Is the supply of services B2B or B2C?

For the purposes of the place of supply rules, it can be important to establish whether the transaction is being made B2B or B2C. A B2B transaction technically occurs when the customer is what is known as a ‘relevant business person’. On the other hand, a B2C transaction occurs when the customer is not a relevant business person.

For

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