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VAT - UK - Gibraltar - Consulting Services - Reverse Charge?

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    VAT - UK - Gibraltar - Consulting Services - Reverse Charge?

    Hey guys,

    I have been doing a ton of research and cannot seem to come up with the correct answer. I have also reached out to 3 separate accountants and each of them have provided a different
    response. Therefore I am hoping I can get some help here.

    I plan to open a company in Gibraltar, which is not on the EC list. The GibCo will issue "management invoices" to companies within the EU, i.e. UK.

    It is my understanding that the GibCo is outside the scope of VAT and does not charge VAT on these invoices:

    Section 2.5:
    "...There’s no VAT in the Channel Islands or Gibraltar, which are outside the UK and EU for VAT purposes..."
    Source: https://www.gov.uk/government/public...ly-of-services

    My question is, does the UK company need to account for the VAT and apply a reverse charge (which I thought only applied to EU countries) or is it outside the scope entirely?

    Any help, thoughts and advice is appreciated.

    If you are resident in the UK then you may have a few other issues:

    - getting anybody to deal with GibCo may be
    - the seat of control is probably the UK thus GibCo will become UK Tax resident anyway

    In terms of the question asked the place of supply is almost certainly uk so the reverse charge should apply to the customer.


      VAT - UK - Gibraltar - Consulting Services - Reverse Charge?

      You’ll need to answer a couple of questions honestly:

      - where is the place of supply
      - where does the supplier ‘belong’


      My reading of it is that reverse charge probably doesn’t apply, but that the Gibraltar company would be liable to register for VAT in the U.K.
      Last edited by meridian; 29 January 2018, 22:37.


        Yes, any EU business purchasing services from outside the EU (Gibraltar in this case) would need to apply the reverse charge at their end. It doesn’t only apply to supplies received from other EU VAT zone countries.

        This does of course assume the place of supply is in the receiving country which under the B2B general rule for services is the case.

        It’s not something the Gibraltar business needs to be concerned about.


          Sorry chaps, but on the face of it I still disagree. The OP will need to clarify where s/he will be located though.

          Assuming that the OP is located in the U.K. and providing management services to related companies (why else would they be so concerned about whether the U.K. companies were liable for reverse charge, if it was none of their business?), then:

          - We’re all agreed that the place of supply is in the U.K.

          - For the Gibraltar company making the supplies, they may fall foul of the second and third “belonging” rule, where

          You belong in the UK for the purposes of either making or receiving a supply of services when you have any of the following:

          a business establishment in the UK and no fixed establishment elsewhere that’s more closely connected with the supply
          a business establishment outside the UK and a fixed establishment in the UK that’s most directly connected with the supply
          no business or fixed establishment anywhere, but your usual place of residence is the UK
          Section 3.3:
          A registered office alone is not sufficient to create a business establishment.
          The reverse charge applies in certain circumstances, including where the supplier “belongs”:

          The reverse charge applies where:

          the place of supply is the UK
          the supplier belongs outside the UK
          you belong in the UK
          the supply is not exempt (this includes exempt supplies subject to an option to tax)
          for supplies not within the general rule, you’re VAT registered in the UK
          If the supplier belongs in the U.K., then there is no reverse charge. If that is the case, then Section 2.6 applies:

          If you supply services whose place of supply is in the UK, you may be liable to register for VAT in the UK. From 1 December 2012 if you are not established in the UK, there is no registration threshold for taxable supplies of services.

          This means that if you make any supplies of services taxable in the UK, to which the reverse charge (see section 5) does not apply, you must register for VAT here
          IANAA though, and the advice is worth what the OP has paid for it.


            You may be correct. The reverse charge can only apply if the co does not need to register.

            Notwithstanding that the GibCo may well be UK resident anyway.

            Getting any of it wrong will lead to a world of pain.

            If there is a thought that this sort of setup may get some income out of UK CT net it is unlikely to be effective.

            Though if the comapny in Gib happened to own some IPR the situation could possibly be different.


              Maybe this will help:

              Questions: What country are you actually living in? (not "what country are you claiming residency" or "what country is on your passport", but "where are you actually located most of the time?")
              What does your accountant say about your plans?
              Do you think you've worked out a magic bullet way of paying little-to-no tax and then claiming 20% for VAT but never paying it?
              I'm perfect, in a very specific and limited way.
              Hands... out infractions
              Face... the music
              Space... between the ears


                I think one of the reasons people explore this sort of arrangement is because they are supplying services to various financial institutions who cannot reclaim the VAT.

                It was rather easier pre-2012 ish.


                  Hi. Totally new to business and VAT and wanting to learn more about this (from an educational point of view). I've worked in SEO for a long time (as a self-employed person) but making a foray into my own business. A lot of my clients/customers are in non VAT counties outside of EU rules (Channel Islands and San Marino specifically) but I understand these to be similar VAT rules to Gibraltar. The services from my end are usually consultation for configuring Google products, and buying of advertising services from the likes of Twitter, Google and Facebook (usually Ireland invoicing companies).

                  Obviously, I'm not looking at any illegality but want to understand about the practical implications of these sorts of setups for both me and potential clients in future. Assume the status quo re: Brexit.

                  If I was to move to Jersey (or others) and incorporate/run my new business from there, I would not charge VAT on my services - and there would be no issues for clients in these territories as no vat charges would be levied at either end? Right?

                  But if I then take on EU based clients (currently the UK), would my setup be a benefit or detriment to them? If I supplied from my home office in Jersey SEO services to a UK client, would I add VAT on my invoice? Assume not as I'm based in a non-VAT territory? Right? But my questions then become:

                  1. Would they have to account for VAT (either make a payment or alternatively earn a tax credit) for VAT on their end? The benefit/cost question.
                  2. Does the fact I'm providing digital advertising services change anything?

                  Thank you