Study vat on services in your country and other eu countries

If you are a vat registered trade in any eu country including the UK then you certainly need to study VAT on services in your country and other eu countries so that you can charge the applicable vat rate as well as make proper vat reclaims for vat paid. The eu vat and uk vat rules are quite complex, and you need to fully understand them if you do not want to end up paying vat on services without charging your clients or forget to reclaim vat already paid on certain services.

EU vat rules issued as directives by the European Commission usually differentiate between vat applicable on services provided to taxable persons engaged in businesses and non-taxable persons such as individuals that utilize such services for personal use only. In such cases where the customer is a business then vat must be charged at the customer’s place of address or in the customer’s country. On the other hand wherever services are supplied to private individuals then vat will have to be charged in the supplier’s country. However, there are also several exemptions to these rules and if you are in any doubt then you should get them cleared through your vat agent or consultant since your business can certainly benefit if you can reclaim vat already paid on services in another eu country where vat is followed.

If your vat registered business is located in the UK then you will need to adhere to uk vat rules issued by hmrc to ensure that vat on services are paid, collected and reclaimed safely. Hmrc lays a lot of emphasis on place of supply to establish the correct rate of vat on such services. For example, if your business is located in the UK but the services are supplied to another eu country that follows vat then that supply falls outside the purview of vat in the UK, i.e. no vat needs to be charged in the UK. You will still need to inquire with the country where those services have been supplied to find out if you need to pay vat in that eu country. However, if that service is provided to a customer in any other country that is not in the European Union then you will not have to charge any eu vat nor will you need to include that particular sale in your vat return.

However, for services supplied within the UK itself, there are several vat classifications issued by hmrc vat that specifies on whether you need to charge the standard rate of vat at 17.5%, reduced vat rate of 5%, or zero vat rate, depending on the services offered by your business. There are also certain services that are vat exempt or fall outside the purview of vat, where usually you cannot claim any vat back. You can visit the website of hmrc.gov.uk to find out about these classifications and exemptions so that you do not end up over-charging or under-charging your customers or run afoul of prescribed vat rules.

If your business is located in the UK and you need to provide or utilize services outside the UK or even within the UK then there are several vat rules applicable on such services. You will need to study vat on services in your country and other eu countries in great detail, and also enlist the help of an expert vat agent so that you pay and collect vat without violating any uk or eu vat rules.