working in Holland: VAT situation?

[tommyrot]

I'm a UK-based contractor with a VAT-registered limited company currently working on-site in The Netherlands for a few months. The work is at a NL-based company but arranged through a UK-based agency. Hence, I will invoice the agency for payment.

If I were invoicing a company in NL (or anywhere else in the EU for that matter) that was VAT-registered in their local country, the situation is seemingly clear -- I can apply VAT at zero rate on the invoice *provided* I quote the recipient's own VAT number on the invoice.

But in this case, although I'm providing the service in-situ in Holland, the company being invoiced is in the UK.

Should the VAT on my invoice be zero-rated (reflecting the reality that the work is done abroad), or should it be at 17.5% (because the company being invoiced is not abroad?).

--

On another note, can I claim back the VAT I've paid on local services such as hotel accommodation, as I normally would do when on-site in the UK?

[Nixon Williams]

If you are invoicing a UK agency then you should charge VAT at 17.5%.

If you were invoicing direct to a Dutch company no VAT would be charged provided your invoice displayed both your VAT number and your Dutch clients VAT number.

You can reclaim Dutch VAT on some of your spending but not via your UK VAT return. The claim must be made direct to the Dutch authorities and in their own language. Some countries have minimum levels. Most small companies do not bother. If you want to pursue this there are some specialist services that reclaim on your behalf for a hefty cut.

I hope this helps.

Alan

[tommyrot]

Alan,

Thank you for your very quick response.

The answers you give on both counts are kind of what I was expecting to hear.

The only fly in the ointment is that the agency in question is getting a bit shirty over the notion of me applying the 17.5% rate, I guess because they zero-rate their Dutch client in their own invoicing. They went so far as to suggest that I invoice them as an individual -- ie, outside my limited company structure -- so that I wouldn't be perceived as 'VAT-registered' anyway. Sounds well dodgy that!

[Nixon Williams]

Your agency can reclaim the VAT you charge so I cannot see what their problem is.

DO NOT invoice as an individual, this will lead to problems, in anycase I am surprised that the agency suggested this as this could lead them being liable for your tax!

Alan

[expat]

Alan,

Thank you for your very quick response.

The answers you give on both counts are kind of what I was expecting to hear.

The only fly in the ointment is that the agency in question is getting a bit shirty over the notion of me applying the 17.5% rate, I guess because they zero-rate their Dutch client in their own invoicing. They went so far as to suggest that I invoice them as an individual -- ie, outside my limited company structure -- so that I wouldn't be perceived as 'VAT-registered' anyway. Sounds well dodgy that!

Bit late for them to think of that. If they contracted to your Ltd Co and that is VAT registered, then you invoice the UK agency for UK VAT.

OTOH if they are prepared to let you invoice as an individual, I don't see the problem. HMRC might, of course, and might suggest later to the agency that they were your employer and therefore liable to pay your NIC and PAYE.

Would that upset you? Am interested in any knowledgeable input on this.

Edit: appreciate Nixon Williams input. What problems, may I ask? And how do the agency reclaim the VAT?

[Nixon Williams]

Edit: appreciate Nixon Williams input. What problems, may I ask? And how do the agency reclaim the VAT?

Problems in the sense that to receive the income as a private individual may not be as tax efficient and you would need to register as self employed, pay class 2 NIC etc.

The agency would claim the VAT back on their tax return as an input.

Alan