B2B with an EU client - VAT

[d000hg]

All of my past work is with the US or UK, which are both nice and easy regarding VAT. But a Swedish company expressed some interest using me for some remote freelance work. My understanding is all EU countries have some version of VAT(?) called different things... what's the situation in my case? Am I obliged to charge VAT just the same as if I was dealing with a UK company - and if so how do I go about declaring/paying VAT from another EU nation?

This is direct B2B with the client, working from the UK to write them code for an existing application.
d000hg Ltd is VAT-registered but NOT on FRS.

[Clare@InTouch]

All of my past work is with the US or UK, which are both nice and easy regarding VAT. But a Swedish company expressed some interest using me for some remote freelance work. My understanding is all EU countries have some version of VAT(?) called different things... what's the situation in my case? Am I obliged to charge VAT just the same as if I was dealing with a UK company - and if so how do I go about declaring/paying VAT from another EU nation?

This is direct B2B with the client, working from the UK.

If you're selling services within the EU then the place of supply will be the place where the business customer is established, and they account for VAT under reverse charge rules. You just need to add their VAT number to your invoice, then you can zero rate it.

If you're selling to a private non-VAT registered person you have to charge them VAT as the place of supply is the UK.


Have a read through here:

HM Revenue & Customs: How to work out your place of supply of services for VAT

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

If you are in the UK and the place of supply of your service is in another EU country, the supply is outside the scope of UK VAT.

[d000hg]

It seemed simple until the bit where they say electronic services are special: HM Revenue & Customs... a whole bunch of docs to read, and even the definition of "electronic service" appears to require its own doc! As a UK company selling the service of software development, I suppose I am eligible but it sounds like you have to register for the scheme? Is it optional or mandatory?

Also,

If you are in the UK and the place of supply of your service is in another EU country, the supply is outside the scope of UK VAT.

That would be the normal case outside the special scheme according to this if I understand right... but what exactly does "outside the scope of UK VAT" mean - I just don't charge it?

Also - does all this have to be sorted out before starting work or invoicing? It seems rather complex when being in the EU was supposed to make trade easier!

[ASB]

It seemed simple until the bit where they say electronic services are special: HM Revenue & Customs... a whole bunch of docs to read, and even the definition of "electronic service" appears to require its own doc! As a UK company selling the service of software development, I suppose I am eligible but it sounds like you have to register for the scheme? Is it optional or mandatory?

Also, That would be the normal case outside the special scheme according to this if I understand right... but what exactly does "outside the scope of UK VAT" mean - I just don't charge it?

Also - does all this have to be sorted out before starting work or invoicing? It seems rather complex when being in the EU was supposed to make trade easier!

It is unlikely that you are covered by any of the "special" rules; these apply to specific services. Check them. Ask the vat man and try and get a written opinion. Getting it wrong can be expensive.

Outside the scope essentially means "not involved in". This is important from an FRS point of view. If it is zero rated it is included in your turnover for FRS. If it is outside the scope it isn't. (It is for precisely this reason I never joined the FRS since at that point the guidance was unclear and vat wouldn't give a written opinion on my case).

Also there are invoicing rules about ensuring sterling amount etc are shown and the rates which may be used for this. Also you have to account in sterling terms, this can give rise to currency gains and losses (it is my view that these do affect your FRS turnover, YMMV).

As to electronic services; very unlikely. This is geared around ecommerce. Part of the definition is something like the service is automated, minimal human intervention, not viable unless delivered electronically. Software development doesn't really fit this categroy. But if you had developed something like a website generator from templates that would fit it. The development of the generator itself wouldn't.

[ducks for cover]
It has been covered in some detail before, along with a lot of links to relevant guidance etc. These should go some way to answering most of the question you have. The likelyhood is you won't be charging vat, the services are outside the scope so no huge FRS hit, but that is not a certainty.

[d000hg]

Should have mentioned this before but to clarify - I am not on FRS. Will amend original post accordingly.