[]

Charging VAT on supplies of services abroad

Whenever you make a supply, then for VAT purposes, it is essential to know the place of supply. This determines which country's VAT rules should be used for the supply, and how you have to account for the VAT on the sale.

If you are supplying goods, then the place of supply is the place where the goods are delivered to the customer. However, if you are supplying services abroad, then the place of supply is not always obvious.

This guide explains the rules you must use to work out what is known as the 'place of supply'.

On this page:

What is the 'place of supply' and why is it important?

The place of supply is the place where something that you have supplied is liable to VAT. With goods, the place of supply is usually where your customer took delivery of them. However, with services, deciding the place of supply is more complicated. There are various rules that apply, depending on whether you have more than one business location, the kind of service you provide and the place where your business is legally registered.

The place of supply is important, because it determines where VAT is charged and paid.

If you are in the UK and the place of supply is in the UK, you charge and account for VAT according to UK VAT rules.

See our guides on how to charge VAT on the goods or services that you sell

If you are in the UK and the place of supply is in another EU country, you can zero rate the supply if the customer is a business. However, you must charge and account for UK VAT if the customer is not a business, and you may need to register for VAT in the country of supply.

See the sections on supplies to the EU in our guide on charging VAT on exports, despatches and movements of goods abroad

If the place of supply is not in the EU, then your supply of services is outside the scope of VAT. You don’t have to charge VAT or include the sale on your VAT return.

There are special arrangements for electronically supplied services.

Find out more about the special arrangements for charging VAT on supplying electronic services internationally

Top

The basic rule and the place of belonging

For most supplies of services, the place of supply is decided by what is known as the basic rule. There are, however, some supplies which are subject to special rules, which will affect their place of supply.

The basic rule is that if you supply services, apart from those covered by special rules, then the place of supply is the place where you belong. The place you belong is decided by various key principles.

Is your place of belonging in the UK?

Under the basic rule, you belong in the UK if:

  • your business establishment - your head office or only office - is in the UK, and you have no fixed establishments - subsidiary offices or agencies - in other countries
  • your business establishment is in the UK and you have fixed establishments in other countries, but the UK office is the one mainly concerned with supplying services
  • your business establishment is not in the UK, but you have a fixed establishment here which is the one from which you supply services
  • you don't have either a business or fixed establishment in the UK or elsewhere, but your business is a corporate body - eg, a limited company - which is registered in the UK
  • you have neither a business nor fixed establishment in the UK or elsewhere, but the UK is your usual place of residence

Note that a business can have only one business establishment, but can have several fixed establishments.

Can you belong in more than one place?

If you have a business establishment in the UK and establishments in other countries, you need to look at what each establishment does in terms of supplying services. If, for example, your company has its head office in the UK, but has a French subsidiary that supplies services to local businesses, then the French company belongs in France for VAT purposes. This is the case even if your head office belongs in the UK for supplies that it makes in the UK.

Top

Services supplied where the supplier belongs

The following are services which are always supplied in the country where the supplier belongs:

  • management services other than consultancy, accountancy, legal or financial services
  • clerical or secretarial services, including the provision of office facilities
  • archiving services
  • services related to the entertainment industry, such as production assistant, hairdresser and make-up artist for films or television
  • veterinary services
  • subscription broadcasting

See the section in this guide on when the place of supply is where the customer is located

Hiring out a means of transport

Hiring out a means of transport falls under the basic rule, although there are other rules for hired goods that depend on where they are used. Hiring a means of transport includes only the transport itself, and not the services of a driver, pilot, operator or crew.

A means of transport is something which can actually be used for transporting goods, and includes ships, yachts, aircraft, road transport, caravans and trailers, motor cycles and bicycles, and railway rolling stock. It doesn't include freight containers, static caravans or racing cars.

More about the rules for transport services in VAT Notice 741

Top

Services supplied where the customer belongs

For some services the place of supply is where the customer is. These services are often intellectual in nature, and are provided in a different place from where the supplier has a business or fixed establishment. The place where the service is provided can also vary while the service is being provided.

Advertising services

These services include marketing communications that are aimed at encouraging the sale of a product or service. This can include a person or persons, such as an actor, singer or group. It includes hiring someone to provide sponsorship or product endorsements, but excludes the provision of exhibition, conference or meetings services.

Consultants

This includes the services of engineers, consultancies, legal and accountancy firms and similar organisations. There are several detailed criteria and exclusions, and if your business provides consultancy services you should review these criteria carefully.

More about determining the place of supply for consultants in VAT Notice 741

Copyright services

These services include transfers and grants of copyright, and other intellectual property rights, for which payments - usually known as royalties - are made. These services must include intellectual property rights for them to be considered copyright services.

Finance, insurance and banking

This includes debt collection services, insurance and reinsurance, trustee services and the sale of securities and some precious metals. Most financial services are exempt from VAT in the UK. This may not, however, be the case in all EU countries.

Hiring goods

These services include hiring out or leasing anything other than a means of transport - which is covered by the basic rule - and land, property or installed machinery, which are covered by special rules. Typical examples include hiring computer equipment, office furniture and freight containers.

The place of supply depends on where the supplier and customer belong and where the hire services are used. However, there are special rules about hire services. If the supplier is in the UK, but the service is used outside the EU, or if the supplier is outside the EU but the service is used in the UK, then the place of supply is considered to be where the hired products are used.

Freight containers that are exported from the EU are zero-rated for VAT, whether they are sold or hired.

Information

Information includes the supply of facts, data, figures and other material, including online information and digitised non-fiction publications.

This excludes:

  • the delivery or transmission of someone else's information, by any means
  • information relating to specific land or property

Provision of staff

This includes providing personnel to work as if they were an employee of another person or organisation. It's important to remember that it is the supply of staff that is the service - for example supplying temporary catering or cleaning staff - and not a supply of services for which you use staff, such as providing contract cleaning or catering services.

Telecommunications services

These services include sending or receiving information or material by cable, fibre optics, radio waves including microwaves, or satellite. The service does not include the supply of the content, which is covered by other rules, but it includes fixed and mobile telephone calls, fax, Internet access including email, satellite and terrestrial transmission, and data processing services.

The place of supply largely depends on where the supplier and customer belong and where the services are used. However, if the service is used outside the EU, or if the supplier is outside the EU but the service is used in the UK, then the place of supply is considered to be where the telecommunications service is used.

Registering for VAT in another country

If you belong in the UK and your customer is in another EU country, you may need to register in that country.

Get information about charging and registering for VAT in another country in our guide on charging VAT on exports, despatches and movements of goods abroad

Top

Special rules for the place of supply

In some cases, the place of supply is determined by what service is supplied, rather than where the supplier or the customer belongs.

Digitised products

These are products which can be transferred electronically and downloaded by the customer. The basic rule applies to many digitised products, but the place of supply can also depend on the customer's location. Some digitised products come outside the basic rule, for example:

  • permission to publish a picture which the customer downloads, which comes under the rules for copyright services, so the service is supplied where the customer belongs
  • customised software, which comes under the normal rules for the export of goods
  • digitised newspapers - see the section on digitised information below

See our guide on charging VAT on exports, despatches and movements of goods abroad

Digitised publications

Digitised publications are combinations of text and images, such as online newspapers, e-books and e-zines. The place of supply depends on the content. If a publication is largely fiction, such as a novel, the place of supply is always where the supplier belongs. If the content is non-fiction, it is treated as information, and special rules apply - the place of supply is where the customer belongs.

See the section in this guide on services supplied where the customer belongs.

Land and property services

The place of supply for services related to land and property is always where the land or property itself is located. Land and property includes the land itself, plus any buildings or other structures, including installations such as oil production platforms. Machinery installed within a building is considered goods rather than land or property. Services include:

  • construction, refurbishment, conversion, repair, maintenance and demolition
  • professional services of estate agents, architects, surveyors, etc
  • property management and maintenance services

More about VAT on land and property services in VAT Notice 708

Physical performance services

For physically performed services, the place of supply is always where the performance takes place, irrespective of where the customer or supplier is located. These include such services as:

  • entertainment and cultural performances, including sports events, before a live audience
  • services for exhibitions, conferences or meetings - see below
  • support services relating to performances and exhibitions, such as organising supplies and services
  • valuing or carrying out work on goods

Services covered by this section generally relate to a live event or physical activity, and include sporting appearances, other than sponsorship events which count as advertising, singers and actors appearing before a live audience, and specialists providing a service at a conference or exhibition.

Services that aren't covered by this rule include:

  • Physical performances for sponsorship or product endorsement.
  • Actors or singers not performing before a live audience.
  • Ancillary services, eg, written translations, which are not provided at the performance venue itself. The place of supply of ancillary services is always determined by where they are actually performed.

Exhibition organising needs careful consideration as it can cover a range of services. It is important to consider precisely the service provided, as this will determine the place of supply. For example, if you organise an overseas exhibition from the UK, and subcontract all services to local suppliers, the place of supply of your service is in the UK. However, if you provide a complete package to exhibitors, and provide that package on-site, then your place of supply is generally in the country where the exhibition is held.

Work carried out on goods

Special rules apply for work carried out on goods, including valuations.The place of supply is where the customer belongs if both of the following conditions apply:

  • the customer is registered for VAT
  • the valuation work is done in one EU country and the goods then leave that country

Goods in this context means movable items, not fixed installations, and work includes any kind of physical service, including valuation, processing, manufacturing, repairs and maintenance, and alterations or finishing.

Transport

For passenger transport, the place of supply is where the transport takes place. If it takes place outside the UK, then it falls outside UK VAT rules.

For freight transport, the place of supply varies according to the type of transport:

  • for transport that is wholly within the UK, or where it is between the UK and a non-EU country, the place of supply is where the transport takes place
  • for transport between two EU countries, and for arranging such transport, the place of supply is the place of departure of the goods
  • for ancillary transport services, and for arranging ancillary transport services, the place of supply is where the services are carried out

If your customer is registered in the UK, you must account for the VAT. If your customer is registered in another EU country, they account for the VAT.

More about VAT and transport in VAT Notice 744B

Charters

If you supply a ship or an aircraft:

  • complete with crew and with a written charter agreement, the place of supply is where you belong
  • without a crew, but with a written charter agreement, it counts as hiring a means of transport and is covered by the basic rule
  • without a crew and without a written charter agreement, the place of supply depends on precisely what services you provide

More about VAT and charters in VAT Notice 744C

Registering for VAT under special rules for place of supply

If you belong in the UK and your customer is in another EU country, you may need to register in that country.

Get information about charging and registering for VAT in another country in our guide on charging VAT on exports, despatches and movements of goods abroad

Top

Intermediaries

Intermediaries provide a service in arranging or facilitating the supply of goods or services. They are often called brokers or agents, and their customer is the person or organisation to which they supply their service. This can be the supplier or the buyer of the goods or services, or both.

If you are an intermediary, then the place of supply of your services depends on:

  • the kind of service
  • where it takes place
  • if the customer is in an EU country
  • whether the customer is registered for VAT

The place of supply for a service that involves the supply of goods is usually where the goods are supplied. There are, however, special rules for imported goods from outside the EU.

The place of supply for arranging a service depends on the kind of service. Thus, arranging:

  • a hired means of transport comes under the basic rule
  • land-related services comes under the special rule for land and property services
  • physical performances comes under the special rule for physical performances
  • passenger transport and domestic or international freight transport comes under the various transport rules
  • other services comes under the basic rule

More about determining the place of supply for intermediaries in VAT Notice 741

More useful links

More about the place of supply for services in VAT Notice 741

Get information about charging VAT on exports, despatches and movements of goods abroad

Top

Business Link access to better business | © Crown Copyright | Terms & Conditions | Privacy policy | Accessibility | Directgov Straight through to public services