The VAT Complexities of Supplying Services Abroad

VAT on overseas services

Due to the advancement in technology, access to international business has gone more handy and easy. All you need is a laptop and a good connection to the internet and you are ready to step into the international business world. International clients are agreed on working with the freelancers’ services and products or with small businesses. However, you will have to consider the tax implications of this procedure. When you plan to supply your services or products abroad, you will have to consider the tax obligations as well. VAT on overseas services is a serious matter to consider in this regard.

Moreover, the Place of Supply of Services and the relevant set of rules have equal importance to keep the process smooth. You will decide which country VAT set of rules will be followed for you. According to the nature of your services, there are two possible options that you can take into account. You need to figure out whether your services will be supplied on business to business basis. We call it B2B as well. The other option for supplying services is business to customers which is called B2C in other words. Further in the discussion of this article, we will delve into the facts about the general rule of VAT for overseas supplies, how to calculate VAT, and a few real examples related to this.

 

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VAT on Overseas Services – What is General Rule About the Place of Supply?

There are several sets of rules and caveats for the place of services and supplies in the business. Most of the cases under this experience are mostly covered by the set of general rules guided by HMRC. Now according to the general rule when you are dealing with the business to business (B2B), the place of supply will be considered the place from where your customer belongs to.

On the other hand, if the services are being provided to a business as happens in business-to-customer supply, or to the individual who is considered to be a non-business customer, the place of supply will be considered the place of the supplier.

 

How to Calculate What VAT You Can Charge and When?

Once you are done with the procedure of applying the general rule and if you figure out that the place of supply is in the UK, you will follow the general rule of the UK in this regard. UK VAT charges will be followed as well. If it is not the UK but any place in the EU, you will follow EU VAT rules to charge VAT. Get yourself registered with the account in the country where you will supply your services. To ensure the right procedure, you can directly get in touch with the relevant authority of the relevant country. This will help you to find out how can you treat the services to supply.

Now if the place of supply is neither in the UK nor in the EU but outside of it, this is out of the scope of VAT. You need to ensure that the sale is being recorded through box 6 of your VAT Return. You will be required to provide the total value of sales.

 

Learn With Examples

Let’s take the example of your aim to supply catering services to the UK for an event, however, your client will deal in business with customers in the USA. B2B sale-related general rule that the place of supply will be considered where the customer is giving. You will not charge any kind of VAT according to the rule even if the event is being held in the UK. In the same scenario, if the individual was being treated according to the B2C rule, the VAT would be levied.

 

The Bottom Line

Now that you have gathered a fair amount of information about VAT on overseas services, we can bring the discussion towards wrapping up. It is not wise to deny the complexity of VAT when you aim to supply your services abroad. However, there is always a relevant set of rules that can guide you to a professional solution. We hope these few minutes of reading will help you to develop a better understanding of the rules related to VAT and how it is implemented in different business scenarios.

 

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Disclaimer: All the information provided in this article on VAT on overseas services, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.