UK sole trader dispatching EU services

[Riccardo]

Hi there,
this is my first post here.

I'm looking for information about selling services to other EU nations (at the moment Italy)

The question is:
can a sole trader without VAT sell a service (e.g. website creation, software licences, etc.) to another EU nation?

Serching on the web I found this site landing on
Contractors' Questions: How to invoice clients in the EU? :: Contractor UK

I don't see any date so I can't be sure that's still valid nowadays.

Many thanks in advance.

[Andrew@Wisteria]

Hi there,
this is my first post here.

I'm looking for information about selling services to other EU nations (at the moment Italy)

The question is:
can a sole trader without VAT sell a service (e.g. website creation, software licences, etc.) to another EU nation?

Serching on the web I found this site landing on
Contractors' Questions: How to invoice clients in the EU? :: Contractor UK

I don't see any date so I can't be sure that's still valid nowadays.

Many thanks in advance.

Yes

[Riccardo]

Great!

Is there anyone who also knows how the target EU customer has to handle that invoice without VAT?

[borderreiver]

If you're not VAT registered then surely it's irrelevant how the customer handles the VAT, because there isn't any?

If you were VAT registered, then you would zero-rate the supply provided you quoted both your and their VAT numbers on the invoice. There are other requirements for the invoice as well, but it's nothing too weird.

[ASB]

Great!

Is there anyone who also knows how the target EU customer has to handle that invoice without VAT?

It depends how the service is provided amongst other things. Where the services are performed are also relevant. There are circumstance it which it may just be required for the end customer to self account for vat.

It is unlcear where you are vat registered or not (I believe not); but the end customer still has some reporting obligations in some cases.

Starting link: http://www.hmrc.gov.uk/vat/managing/...s/services.htm
Check HMRC; they have a good few pages on it.

[Riccardo]

It is unlcear where you are vat registered or not (I believe not);

At the moment none of the 2 cases: I own an italian company, but I want to start as a sole trader here for many reasons, last but not least

1) Taxes on earnings that here are taxed 20%, there are taxed 68.3%!!! (on 100Eur you pocket 20!)
2) Italy doesn't deserve my money
3) I'm living in the UK now so I prefer to "help" UK than Italy.

So, summarizing

1) I'd like to start without VAT at least for the first year.
It's now clear that I can dispatch services to Italy without the need of VAT.
In the meantime I've also found many other UK guys trading without VAT with others EU countries and never had problems (never fined).

2) I'd like to know how to handle an invoice received from EU
I suppose that if I receive an invoice from e.g. Germany, being a sole trader without VAT I only have to register it as allowable expenses and that's all. No Intrastat, right?

Check HMRC; they have a good few pages on it.

I've spent many hours there. I did the course for sole traders, I visited all the suggested links, downloaded/read the HRMC pdf "Giving your business the best start with tax" and "A Guide To Export Procedures". But unfortunately where the word Export/Dispatch are mentioned they are always bounded with VAT traders. I wasn't able to find export connected to the NON VAT case. The only cases with non VAT + Export are related to the opposite case: a VAT UK trader selling to EU non VAT end user.
That's why I was wondering if it was possibile to export/dispatch (as they call the export limited to EU countries) without VAT. In this regards, HMRC and gov.uk looks quite useless. I was told by others on another forum that probably they don't talk about NON VAT export because it's obvious that without VAT none of that apply and a sole trader has to behave as usual both for national or international trade.

[Riccardo]

@ borderreiver

If you're not VAT registered then surely it's irrelevant how the customer handles the VAT, because there isn't any?

Probably you don't know how things work in Italy!

My question is actually useless since it's not my problem, but I was asking that because 90% of italian accountants (mine included, and it's a big studio), receiving an invoice without VAT have the following choices:
1) Suicide
2) Activate NASA computers browsing 30*10^60 laws per second (laws that are changed by the 2000 ministries basically at the frequency of Plank time, so you don't have the time to finish the search that you have to start it again ).

Just to make you understand better what are we talking about.
- 30/9/2013 they decide to rise the IVA (VAT) of 1 point.
- Few hours later, 1/10/2013, the official news is out and IMMEDIATELY ACTIVE!
Thousands of accountants sent millions of emails/faxes to notify this change to their clients. Tons of problems to be handled immediately with cash registers and computer softwares.

If it sounds like science fiction, you can check online. E.g. this article has been release on 1/10/2013 for that same day: Dal 1° ottobre fatture con IVA al 22% - EuroconferenceNEWS

So, about my previous question: "Is there anyone who also knows how the target EU customer has to handle that invoice without VAT?", should now be more comprehensible why I was asking that: they will surely ask me for a solution because I am the problem. Someone probably will tell me that he can't accept an invoice without VAT because it's illegal, and so on...

On this regards, on a forum dedicated to translations (they are well accustomed to this kind of problems) I've found a simple but useful advice: adding a simple sentence to the invoice, such as:

- "VAT not applicable"
or
- "VAT-exempt: HMRC Reference Notice 700/1"
and so on.

At least they'll know it's normal here.

[borderreiver]

Probably you don't know how things work in Italy!

Actually I'm always pleasantly surprised how MUCH works in Italy when you look at Italian politicians ;-)

If it sounds like science fiction, you can check online. E.g. this article has been release on 1/10/2013 for that same day: Dal 1° ottobre fatture con IVA al 22% - EuroconferenceNEWS

I gave up after the first few lines. I do read Italian, but that's just too much at this time of day ...

- "VAT not applicable"
or
- "VAT-exempt: HMRC Reference Notice 700/1"
and so on.

IANAA, but "VAT not applicable" sounds like the sanest solution to me.

Saluti,
BR

[Riccardo]

Actually I'm always pleasantly surprised how MUCH works in Italy when you look at Italian politicians ;-)

BBBWAHAHAHAAHAHAHAHAAH!
Actually the politicians work (more or less)... the problem is that they work exclusively for themselves; and the number of parties are uncountable with uncountable ministers with uncountable privileges and uncountable wages with uncountable euro/month. Just think this: the "portaborse" (lackey of the ministers... generally friends of him) have a wage of 10,000 euro/month for doing nothing (it is more than the earnings of a UK minister!). The basic wage of a standard italian minister is not less than 200,000/year.

I do read Italian, but that's just too much at this time of day ...

Really? It sounds strange to me meet someone who read italian!

IANAA, but "VAT not applicable" sounds like the sanest solution to me.

I'll go for it!

Bye!

[darrylmg]

In principle I don't think you would have any issue not putting a VAT amount on the invoice.
The Italian customer company (I'm assuming that it's B2B trading) would have to fill in the Italian version of the HMRC VAT return (however crazy that might be) and they would not be able to reclaim the non-existent VAT on your invoice.

However, I was under the impression the rules of supply changed a few years back for distance selling. This meant that companies like Amazon and eBay have to account for VAT at the place of supply (which would be Italy in your case). In which case, you may have to abide by Italian/EU rules and account for VAT.

Thanks to Berlusconi I also gave up on trying to buy a house there since Italy would want to tax my UK house too . Kerrrrrazzzzzzzzzzzzzy.