VAT : Working in Netherlands

[Craig at Nixon Williams]

Thanks a lot for your guidance and comments. I cam across this information on HMRC reg Flat Rate and it does say if my sales are under EU Countries then I need to pay the VAT at Flat Rate

You must include in your flat rate turnover:
· VAT-inclusive sales and takings for standard-rate, zero-rate and reduced-rate supplies
· the value of exempt supplies like rent or lottery commission
· sales of capital expenditure goods, unless they're goods where you reclaimed the VAT on the purchase
· the value of supplies to other EU countries
You must exclude from your flat rate turnover:
· private income
· sale proceeds from goods you own but which haven't been used in your business
· any sales of gold covered by the VAT Act
· non-business income and supplies outside the scope of VAT
· sales of capital expenditure goods where you've reclaimed the VAT on their purchase
· bank interest
For furthered reference please read: HM Revenue & Customs: Flat Rate Scheme: how to complete your VAT Return box-by-box



Any comments on this.

Thanks

You need to add the value of sales made which are outside the scope of VAT in box 6 of the return - however the flat rate percentage should not be applied to the sales made which are outside the scope of VAT.

If you are going to be working there for a while then it may be worth coming off the flat rate scheme as (depending on the nature of supplies made to the Netherlands) you may be able to reclaim some VAT on expenses incurred in the UK. Bear in mind that if it is a short contract, if you do come off the Flat Rate Scheme you will not be able to re-join the scheme for a year.

Hope this clarifies.
Craig

[Boo]

You must include in your flat rate turnover:
...
· the value of supplies to other EU countries
...

I would enquire whether this applies to supplies that are made overseas ? AIUI, bespoke software services such as most of us perform are considered to be made in the destination country and are therefore not subject to UK VAT. But you'd better check that is still true and that it applies to you, if so then you should presumeably not include it in your flat rate calculation and should not have to hand over the VAT.

Boo2

[stek]

I dont' want to be in long call queue with HMRC to clarify this, any more suggestions to HRMC Guidelines.

Don't ask them, you'll get some 17 yo drone, either take the advice here and research to confirm or speak to your accountant.

But basically I'm right, you have registered on the HMRC EC Sales List haven't you? I suspect you haven't....

It's quite simple:

1. Register you company with Government Gateway and subscribe to EC Sales List

2. On invoices invoice in Euros, no VAT but include agent or client local VAT number (or whoever is next from you in the chain), and include a Sterling conversion for bookkeeping based on current STG/EU rate.

3. On UK VAT return declare sales as EU sales

4. On EC Sales List (quarters may not match your accounting periods) declare Sales showing client's VAT number and country.

That's it!

Reading back. if you are invoicing in Euros you need a NL accountant, sounds like you need to do some serious reading and/or pay someone to sort it for you.

[sapnewbie]

I dont' want to be in long call queue with HMRC to clarify this, any more suggestions to HRMC Guidelines.

[stek]

Thanks a lot for your guidance and comments. I cam across this information on HMRC reg Flat Rate and it does say if my sales are under EU Countries then I need to pay the VAT at Flat Rate

You must include in your flat rate turnover:
· VAT-inclusive sales and takings for standard-rate, zero-rate and reduced-rate supplies
· the value of exempt supplies like rent or lottery commission
· sales of capital expenditure goods, unless they're goods where you reclaimed the VAT on the purchase
· the value of supplies to other EU countries
You must exclude from your flat rate turnover:
· private income
· sale proceeds from goods you own but which haven't been used in your business
· any sales of gold covered by the VAT Act
· non-business income and supplies outside the scope of VAT
· sales of capital expenditure goods where you've reclaimed the VAT on their purchase
· bank interest
For furthered reference please read: HM Revenue & Customs: Flat Rate Scheme: how to complete your VAT Return box-by-box



Any comments on this.

Thanks

I think you have to declare the sales on your UK VAT return but you pay no VAT.

You also declare it on your EC Sales List declaration, with your client (i.e. agency) Foreign VAT number so HMRC can track it, and presumably recover it there from the agent if that's how it works. It must balance out somewhere.

[sapnewbie]

Thanks a lot for your guidance and comments. I cam across this information on HMRC reg Flat Rate and it does say if my sales are under EU Countries then I need to pay the VAT at Flat Rate

You must include in your flat rate turnover:
· VAT-inclusive sales and takings for standard-rate, zero-rate and reduced-rate supplies
· the value of exempt supplies like rent or lottery commission
· sales of capital expenditure goods, unless they're goods where you reclaimed the VAT on the purchase
· the value of supplies to other EU countries
You must exclude from your flat rate turnover:
· private income
· sale proceeds from goods you own but which haven't been used in your business
· any sales of gold covered by the VAT Act
· non-business income and supplies outside the scope of VAT
· sales of capital expenditure goods where you've reclaimed the VAT on their purchase
· bank interest
For furthered reference please read: HM Revenue & Customs: Flat Rate Scheme: how to complete your VAT Return box-by-box



Any comments on this.

Thanks

[stek]

...and you should include a Sterling conversion on the invoice and register on the HMRC EC Sales List to declare the VAT on that quarterly...

[Boo]

Thanks for your reply. My Client is based in Netherlands and its a Dutch VAT registered company, so are you sure I should not pay the VAT in UK for my Limited company though I am on a Flat Rate ?

As Craig says you cannot charge VAT in the Netherlands and do not pay any to HMRC.

Your invoice should show VAT levied at 0% and must contain a phrase like :

Levy of VAT reverse charged to <Client Co Name> VAT Ref. <Client Co Vat Ref. Number> in accordance with Article 196 of EU Directive 2006/112/EC on the common system of value added tax.

Hth,

Boo

[Craig at Nixon Williams]

Hi Craig,

Thanks for your reply. My Client is based in Netherlands and its a Dutch VAT registered company, so are you sure I should not pay the VAT in UK for my Limited company though I am on a Flat Rate ?

Many Thanks

Yes that is correct, you will not pay VAT even though you are on the Flat Rate Scheme.

The treatment that you have described sounds like the correct treatment for supplies that are exempt from VAT, yours are outside the scope...

Craig

[sapnewbie]

Foreign VAT is a complicated issue – your problem relates to the ‘place of supply’ rules – for services the place of supply is deemed to be the country which the customer belongs to, not the physical location that you perform the services.

I’m not entirely clear from your post whether you are working for a Dutch company or a UK company? I’ll write both scenarios:

If the customer belongs to Holland then sales will be outside the scope of UK VAT. Therefore no VAT should be charged in respect to the sales made and Flat Rate VAT should not be paid over to HMRC – you should however continue to report the sales made to the Netherlands in Box 6 of the VAT return.

If you are working for a company which belongs to the UK but you are actually performing the work in Holland, then given the customer belongs to the UK it will be within the scope of UK VAT, you should therefore charge VAT on your sales and pay Flat Rate VAT over to HMRC as normal.

Hope this helps!
Craig

Hi Craig,

Thanks for your reply. My Client is based in Netherlands and its a Dutch VAT registered company, so are you sure I should not pay the VAT in UK for my Limited company though I am on a Flat Rate ?

Many Thanks

[Craig at Nixon Williams]

Foreign VAT is a complicated issue – your problem relates to the ‘place of supply’ rules – for services the place of supply is deemed to be the country which the customer belongs to, not the physical location that you perform the services.

I’m not entirely clear from your post whether you are working for a Dutch company or a UK company? I’ll write both scenarios:

If the customer belongs to Holland then sales will be outside the scope of UK VAT. Therefore no VAT should be charged in respect to the sales made and Flat Rate VAT should not be paid over to HMRC – you should however continue to report the sales made to the Netherlands in Box 6 of the VAT return.

If you are working for a company which belongs to the UK but you are actually performing the work in Holland, then given the customer belongs to the UK it will be within the scope of UK VAT, you should therefore charge VAT on your sales and pay Flat Rate VAT over to HMRC as normal.

Hope this helps!
Craig

[sapnewbie]

Hi,

I'm a UK-based contractor with a VAT-registered limited company currently working on-site in The Netherlands for a few months. The work is at a NL-based company and hence, I will invoice the client in Netherlands and get paid GB in UK Business account.

When I Invoice a company in NL that was VAT-registered in their local country, I mention my Company VAT number and client VAT Number as well and my client wanted me to mentioned on my Invoice that ""VAT is shifted to abc-company name NL VAT NUMBER " . Now I have a due for my VAT in UK and I am registered under flat-rate scheme. My accountant is telling me though i cannot claim VAT in Netherlands i still needs to pay VAT in UK as I am registered under Flat-rate. Can anyone please provide their valuable guidance here.

Thanks

own VAT number on the invoice.

But in this case, although I'm providing the service in-situ in Holland, the company being invoiced is in the UK.

Should the VAT on my invoice be zero-rated (reflecting the reality that the work is done abroad), or should it be at 17.5%

(because the company being invoiced is not abroad?).