UK contractor in Belgium - VAT question

[Andy Hallett]

Speak to Sue @ iPaye.

PS I stopped reading past the point of your UK company charging Belgian VAT. Hopefully the posts in between that and this scared you into professional advice.

[grabri]

A) is the agency incorrect to suggest that I charge VAT??
B) if I do not charge vat, how do I claim for expenses??

VAT and expenses are not really related.

If you are VAT registered then you pay VAT on some products that you buy (output tax) and collect VAT on services that you provide (input tax) you then pay(claim) this to(from) HRMC: input - output.

If your total output tax is greater than your input tax then you get a refund from HMRC. This is all assuming that you are registered and paying tax in the UK.

If you are providing the services from the UK to Belgium then as people have suggested you wouldn't charge VAT on your invoice as this would fall under the intra-EU reverse charge.

However it sounds like you are providing the services from Belgium and therefore you should adding Belgium TVA onto your invoices and be registered in Belgium with their HRMC equivalent - and offsetting your output tax against this.

It sounds like you need to take the advice of a Belgian accountant/tax adviser.

[TheCyclingProgrammer]

I wrote my first post on my iPhone whilst in bed this morning.

I think I just made one typo.

But my English was not too bad. I think it was pretty clear.

Let me make it clearer for those who jump to insinuate that in suggesting anything fraudulent: I HAVE JUST STARTED a contract. That means there is no invoicing yet.

That means I haven't added Vat to an invoice Because there has been NO INVOICE.

Invoices happen at the end of the month.

Whilst contracting in the UK, I claimed VAT and this helped with various travel expenses. My question is simple:

A) is the agency incorrect to suggest that I charge VAT??
B) if I do not charge vat, how do I claim for expenses??

I think what people are referring to is this statement:

I'm concerned as I enjoy charging VAT. It's 21% extra revenue. Well not just that, but I travel every weekend to the UK. I incur huge costs to work here.

VAT is not revenue, unless you're on the flat-rate scheme in which case a small surplus amount of it is revenue. Otherwise you're simply collecting it on behalf of HMRC and sending them the difference between your output and input VAT.

So, if you're making a reverse charge supply to a EU business (and not charging VAT yourself) or a domestic supply and charging UK VAT, on the standard scheme it makes no difference to your overall profit and on the FRS you lose out a small amount of surplus VAT. Certainly not what you were implying.

As I said above, if you were based in the UK (as in actually doing the work here) this would be a reverse charge supply of services to the Belgian business and they would account for the VAT but as you're actually working in Belgium you need to check whether you have a requirement to register your business for Belgian VAT.

As you can see from this page, it looks like, as a non-resident company providing services in Belgium, there is a nil registration threshold and therefore YourCo is probably liable to register and charge Belgian VAT:

Belgium VAT registration threshold rise 2016 - Avalara VATLive

[Certifiedpro]

I wrote my first post on my iPhone whilst in bed this morning.

I think I just made one typo.

But my English was not too bad. I think it was pretty clear.

Let me make it clearer for those who jump to insinuate that in suggesting anything fraudulent: I HAVE JUST STARTED a contract. That means there is no invoicing yet.

That means I haven't added Vat to an invoice Because there has been NO INVOICE.

Invoices happen at the end of the month.

Whilst contracting in the UK, I claimed VAT and this helped with various travel expenses. My question is simple:

A) is the agency incorrect to suggest that I charge VAT??
B) if I do not charge vat, how do I claim for expenses??

[TheCyclingProgrammer]

I'd imagine you cannot charge Belgian VAT without being registered for VAT in Belgium.

As Louisa says, normally a UK business providing this kind of service to a Belgian business would be a reverse charge supply. Instead of charging UK VAT the customer would account for the VAT at their end.

However it's possible that as you're actually working in Belgium, depending on Belgian VAT rules you may have a liability to register your business for Belgian VAT immediately (not all countries have a high registration threshold like the UK) and therefore you would then have to charge local VAT directly.

I'd suggest you speak to an accountant familiar with Belgian tax rules.

[borderreiver]

I'm pretty sure that if you work on site in Belgium you must register with the Belgian authorities, possibly from day one. Whether you can do this as a freelancer or you need to set up a Belgian Ltd (which could be a subsidiary of your UK Ltd?) or you can just register your UK Ltd in Belgium I have no idea.

Any other option is, as Cojak already said, presumably fraud. Talk to a Belgian tax advisor immediately.

[cojak]

UK contractor in Belgium - VAT question

The OP is asking us how to commit fraud, shouldn't this post be deleted?

No, it is for us to call them out on the fraud (if this is the case), and to warn others thinking of doing the same thing.

A post telling them how to commit fraud would be deleted.

[Louisa@AardvarkAccounting]

Hello Everyone

This is my first time posting, but I've actually been following this site for many years.

I have a Uk limited company that is VAT registered. The limited company has a euros business and sterling account.

I have just started a contract in Belgium.

My daily rate is in Euros.

The agency, through which I have this contract and to whom I have to invoice to get paid, have asked me to add VAT to my invoice. They are also VAT registered. Well, in Belgium, VAT is known as TVA, So they are TVA registered.

No doubt I have to charge 21% TVA to my invoices. Is that right??

(TVA in Belgium is currently at 21%)

The agency explained that they confirmed this with their legal and accounts team, and it's not only above board, but it's a typical scenario with other contractors from the UK.

Can you confirm this is OK? My accountant says to not charge vat or to use since reverse charge mechanism.

I'm concerned as I enjoy charging VAT. It's 21% extra revenue. Well not just that, but I travel every weekend to the UK. I incur huge costs to work here.

Will I not lose out with this reverse charge scheme?

What do you all do??

Many thanks
Certified Pro.

Without knowing the type of services and/or goods, or your circumstances in full. I will give general rules:

If you are a UK VAT registered Ltd company, who is contracting and providing your services to a business in Belgium then this would be a 'B2B' transaction and therefore I would expect this to be subject to the reverse charge rules.

In which you would not charge UK VAT or TVA on your invoices; stating on the invoice the supply was subject to reverse charge rules, include clients TVA number on your invoices. Plus, you will need to submit an EC Sales List to HMRC each quarter.

If however you were providing services to a consumer/person in Belgium then I'd expect you to charge UK VAT on your invoices.

The only time I believe you'd charge TVA on your invoices would be if your business was selling goods to customers in Belgium who are not registered for TVA are over €35,000 in a calendar year.

[Eirikur]

The OP is asking us how to commit fraud, shouldn't this post be deleted?

[cojak]

Hello Everyone

This is my first time posting, but I've actually been following this site for many years.

I have a Uk limited company that is VAT registered. The limited company has a euros business and sterling account.

I have just started a contract in Belgium.

My daily rate is in Euros.

The agency, through which I have this contract and to whom I have to invoice to get paid, have asked me to add VAT to my invoice. They are also VAT registered. Well, in Belgium, VAT is known as TVA, So they are TVA registered.

No doubt I have to charge 21% TVA to my invoices. Is that right??

(TVA in Belgium is currently at 21%)

The agency explained that they confirmed this with their legal and accounts team, and it's not only above board, but it's a typical scenario with other contractors from the UK.

Can you confirm this is OK? My accountant says to not charge vat or to use since reverse charge mechanism.

I'm concerned as I enjoy charging VAT. It's 21% extra revenue. Well not just that, but I travel every weekend to the UK. I incur huge costs to work here.

Will I not lose out with this reverse charge scheme?

What do you all do??

Many thanks
Certified Pro.

Actually, that is indeed what you are saying.

So yes, you will indeed 'lose out', but since you have been bumping up your day rate through fraud (not other way to describe this), you'll just have to take the hit and be grateful that the authorities haven't found you out yet.

And the huge costs should have been covered either by the client or by you negotiating a rate commensurate with those costs.

[cojak]

I'm concerned as I enjoy charging VAT. It's 21% extra revenue. Well not just that, but I travel every weekend to the UK. I incur huge costs to work here.

Just to confirm - are you stating that you charge clients for a tax that you do not pass on to the tax man?

[Certifiedpro]

Hello Everyone

This is my first time posting, but I've actually been following this site for many years.

I have a Uk limited company that is VAT registered. The limited company has a euros business and sterling account.

I have just started a contract in Belgium.

My daily rate is in Euros.

The agency, through which I have this contract and to whom I have to invoice to get paid, have asked me to add VAT to my invoice. They are also VAT registered. Well, in Belgium, VAT is known as TVA, So they are TVA registered.

No doubt I have to charge 21% TVA to my invoices. Is that right??

(TVA in Belgium is currently at 21%)

The agency explained that they confirmed this with their legal and accounts team, and it's not only above board, but it's a typical scenario with other contractors from the UK.

Can you confirm this is OK? My accountant says to not charge vat or to use since reverse charge mechanism.

I'm concerned as I enjoy charging VAT. It's 21% extra revenue. Well not just that, but I travel every weekend to the UK. I incur huge costs to work here.

Will I not lose out with this reverse charge scheme?

What do you all do??

Many thanks
Certified Pro.