Contracting in EU

[balaplus]

I have the usual one-man limited company in UK (and british citizenship too).
I am in the process of getting a Purchase Order for services from a company in Italy. However I will be physically based in the UK and deliver services to their branch in UK (this company is a multinational). I will raise invoices with the Company branch in Italy and the payments will be made directly from Italy to my business bank account in UK....effectively all within the EU..

(1) Does this raise any tax issues given that I will be physically based in UK for the most part (except for the occasional meeting)?

(2) If yes, what is the easiest way to execute this contract?

PS - The company wants to do this so as to allocate costs to the appropriate project cost centre.

[ASB]

I have the usual one-man limited company in UK (and british citizenship too).
I am in the process of getting a Purchase Order for services from a company in Italy. However I will be physically based in the UK and deliver services to their branch in UK (this company is a multinational). I will raise invoices with the Company branch in Italy and the payments will be made directly from Italy to my business bank account in UK....effectively all within the EU..

(1) Does this raise any tax issues given that I will be physically based in UK for the most part (except for the occasional meeting)?

(2) If yes, what is the easiest way to execute this contract?

PS - The company wants to do this so as to allocate costs to the appropriate project cost centre.

Due to the branch in the UK you *might* have a VAT issue and VATmight be chargeable. Seem advice from HMCR. Also if you are on the FRS you might want to consider the implications. You don't want to be handing over 13% VAT on something you haven't charged vat on (although if the services are not vatable they are probably actually outside the scope of VAT in which case they don't count as T/O for purposes of FRS - but the wording in the guidance is not exactly clear).

[BlasterBates]

Yep agree need to double check on VAT, but expect to charge UK VAT. If the Italian company is purchasing in the UK they pay UK VAT and there is no Italian VAT to pay. That's normally how it works.

[Joe Black]

If the contract is with the company in Italy then normally no VAT would be charged, whether purchasing goods or services.

The fact that those goods/services are being provided to a subsidiary in the same country does indeed raise a question which as BB suggests needs to be checked.

In either case it shouldn't affect you or the client as the VAT should be reclaimable.

[ASB]

In either case it shouldn't affect you or the client as the VAT should be reclaimable.

Well, we used to provide services to an overseas co which had UK subsiduaries. No VAT was charged because the place of supply was deemed overseas (even though I was physically located in the UK).

The worrying bit is if on the FRS no VAT is charged but one would have to pay x% of the invoice - not good. [Despite what it says in the VAT guidance about this being outside the Scope of UK vat HMRC would never actually confirm this in writing]

If the OP is actually providing the services to the UK company then it does raise more vat questions. However I suspect he is providing the services to the UK company on behalf of it's foreign parent. Which still raises VAT questions, albeit slightly different ones.

[balaplus]

Thanks for the replies...

(1) If I do pull out of FRS, does it make VAT issues simpler (i will probaly lose a bit)
(2) If the invoice is raised on the UK office instead of Italy (but with the original PO being from Italy) then is it business as usual for me?