Overseas supplier payment

[m0n1k3r]

Hi,
I have an EU overseas supplier which invoices me on a monthly basis. He charges in their local currency, and I was wondering what would be the most efficient way to pay them?
I have asked my business bank how much does it cost to pay - and I was told there is a £25 fee for any bank transfer in GBP overseas, or the same fee plus a very bad exchange rate if I want to send it in a different currency (Euro in this case). I find that such a rip-off

What other options are there? I have seen Transferwise has a business a business type of account you can set up, and that they use the mid-market rate, plus a small fee. If I use this, would it be trackable, in case of an HMRC enquiry? What kind of documents do I need to keep, to prove that I have paid the invoice properly and in full?

Are there other services which are better that Transferwise, or do I have other options?

On a side note - is it ok if they charge without VAT, and I pay without VAT?

Thanks for any suggestions,
Cristian

Decent UK banks only charge £6 (or thereabouts) for EUR payments within the EU. Failing that, Transferwise is a good option.

Most of my incoming and outgoing payments are in EUR these days, through an EUR current account in a decent bank, with just a small part being transferred over to the GBP account for wages, taxes etc.

[Safe Collections]

We pay our overseas agents using Transferwise and to be honest they are one of the better options available, you can get slightly lower fees with some other providers but TF works fine for us.

Accounting for the payment is also pretty simple using most accounting packages, just allocate the GBP payment to pay the EUR invoice with the exchange rate TF give you for the transfer.

[TheCyclingProgrammer]

Are there other services which are better that Transferwise, or do I have other options?

Assuming your supplier has no means of taking a debit card payment (which shouldn't incur much more than a nominal charge), then PayPal?

On a side note - is it ok if they charge without VAT, and I pay without VAT?

You're presumably UK VAT registered and therefore they are treating this as a B2B transaction and are rightly not charging you local VAT but you have to account for UK VAT on the purchase.

You do not say whether this is a supply of goods or services. If it is services, then it is subject to the reverse charge and you need to report it on your VAT return as if you'd both made and received the supply. You enter the full value of the supply in boxes 6 and 7 and the VAT calculated at UK rates on the GBP amount in boxes 1 and 4, thus cancelling each other out (in other words its just a reporting exercise).

If it is goods, then this is an acquisition for VAT purposes and you need to account for VAT on the supply similar to how you did with services, although the reporting requirements and the boxes you use on your VAT return are slightly different.

This page outlines both:
https://www.gov.uk/guidance/vat-impo...seas-suppliers

Note there is one major difference if you're on the flat-rate scheme: the reverse charge on services is dealt with outside the FRS and you would report it as outlined above (so you don't pay any extra VAT). However when accounting for acquisition VAT on an import of goods, like any other input VAT you cannot reclaim this so you will pay UK VAT on the purchase.

If you're on the standard VAT scheme, then you can recover any acquisition VAT so long as the imports relate to taxable supplies you make in the UK.

[MB2]

Hi,
I have an EU overseas supplier which invoices me on a monthly basis. He charges in their local currency, and I was wondering what would be the most efficient way to pay them?
I have asked my business bank how much does it cost to pay - and I was told there is a £25 fee for any bank transfer in GBP overseas, or the same fee plus a very bad exchange rate if I want to send it in a different currency (Euro in this case). I find that such a rip-off

What other options are there? I have seen Transferwise has a business a business type of account you can set up, and that they use the mid-market rate, plus a small fee. If I use this, would it be trackable, in case of an HMRC enquiry? What kind of documents do I need to keep, to prove that I have paid the invoice properly and in full?

Are there other services which are better that Transferwise, or do I have other options?

On a side note - is it ok if they charge without VAT, and I pay without VAT?

Thanks for any suggestions,
Cristian

I think his invoice and the funds somehow connected to a movement in your bank balance would suffice - HMRC are pretty good at matching them up as presumably you will send the funds to transfer wise to pay them.

Re the VAT - they can charge you without VAT provided they quote your VAT number on the invoice, and you will pay them without VAT, because the items are already in free circulation within the EU. When you invoice the items to your (UK) customer you will charge them VAT but won't be able to recover it so you effectively collect the UK VAT for HMRC when you sell them.

[cristian]

Hi,
I have an EU overseas supplier which invoices me on a monthly basis. He charges in their local currency, and I was wondering what would be the most efficient way to pay them?
I have asked my business bank how much does it cost to pay - and I was told there is a £25 fee for any bank transfer in GBP overseas, or the same fee plus a very bad exchange rate if I want to send it in a different currency (Euro in this case). I find that such a rip-off

What other options are there? I have seen Transferwise has a business a business type of account you can set up, and that they use the mid-market rate, plus a small fee. If I use this, would it be trackable, in case of an HMRC enquiry? What kind of documents do I need to keep, to prove that I have paid the invoice properly and in full?

Are there other services which are better that Transferwise, or do I have other options?

On a side note - is it ok if they charge without VAT, and I pay without VAT?

Thanks for any suggestions,
Cristian