VAT Place of Supply for Services

Taxable supplies

S. 4(2) of UK Value Added Tax Act 1994 defines a taxable supply as a supply of goods or services made in the UK other than an exempt supply. S.31 (1) of the states that a supply of goods or services is an exempt supply if it is of a description for the time being specified as such under various Group headings in Schedule 9 to the Act. The group headings are as follow:

Group 1:	Land
Group 2:	Insurance
Group 3:	Postal services
Group 4:	Betting, gaming and lotteries
Group 5:	Finance
Group 6:	Education
Group 7:	Health and welfare, charities, local authorities and public bodies
Group 8:	Burial and cremation
Group 9:	Subscriptions to trade unions, professional and other public interest bodies
Group 10:	Sport, sports competitions and physical education
Group 11:	Works of art, etc
Group 12:	Fund-raising events by charities and other qualifying bodies
Group 13:	Cultural services, etc admission to museums, exhibitions, zoos and performances of cultural nature supplied by public bodies and eligible bodies
Group 14:	Supplies of goods where input tax cannot be recovered
Group 15:	Investment gold and precious metals

A person making exempt supplies but no taxable supplies is not a taxable person and cannot be registered for VAT in the UK.

Place of supply - Goods

Determining the place of supply for goods depends on whether the goods were supplied with transport or without transport.

Supplies with transport

Where goods are dispatched or transported by the supplier, the customer or a third person, the place of supply is deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer begins. But if dispatch or transport of the goods begins outside the VAT territory of the EU, both the place of supply by the importer liable for payment of VAT and the place of any subsequent supply is deemed to be the EU country importing the goods.

Supplies without transport

Where goods are not dispatched or transported, the place of supply is deemed to be the place where the goods are located at the time when the supply takes place.

Place of supply - Services

Place of supply for services assumes considerable significance because for VAT purposes where the place of supply of any services is in an EU country, that supply is liable to VAT in that country and in no other country. If that country is not the UK, the supply is outside the scope of UK VAT. Where the place of supply of any services is outside the EU, that supply is not liable to VAT in any EU country.

The basic rule of place of supply for services is that supply of services between businesses (B2B services) is in principle taxed in the country where the customer is established while services supplied to private customers (B2C services) are taxed in the country where the supplier is established.

If you are based in the UK and the place of supply of your services is held to be in the UK you will need to charge and account for VAT according to UK VAT rules. But if you are in the UK and the place of supply of your service is held to be in another country then you do not need to charge UK VAT.

BUSINESS TO BUSINESS (B2B) TRANSACTIONS

The general rule for B2B transactions is that VAT is applicable according to the laws of the country where the customer is based. The business customer does not necessarily have to be VAT registered in their respective member state but it must be ‘in business’. A VAT registration number is considered an appropriate evidence to demonstrate the customer’s business status. If the customer is not a business customer the transaction will be treated as a B2C transaction. The exceptions to the B2B general rule are summarised below:

Services	Place of supply
Services connected with immovable property	Where the land is situated
Supplies of admission to cultural, artistic, sporting, scientific, educational and entertainment events	Where performed
Short term hire of means of transport (up to 30 days for vehicles, up to 90 days for vessels)	Where put at the customer’s disposal
Passenger transport	Where transport takes place proportionate to the distance covered
Restaurant and catering services	where physically carried out
Restaurant and catering services supplied on ships, planes and trains (EC transport only)	Point of departure

BUSINESS TO CONSUMER (B2C) TRANSACTIONS

The general rule for B2C is that place of supply for services will remain where the supplier is established. However, there will be various exceptions to the general rule as summarised below:

Services	Place of supply
Services connected with immovable property	Where the land is situated
Services and ancillary services connected with cultural, artistic, sporting, scientific, educational, entertainment or similar activities	Where performed
Short term hire of means of transport (up to 30 days for vehicles, up to 90 days for vessels)	Where put at the customer’s disposal
Long term hire of means of transport	Supplier’s location until 31 December 2012. Thereafter where customer is established
Passenger transport	Where transport takes place proportionate to the distance covered
Restaurant and catering services	Where physically carried out
Restaurant and catering services supplies on ships, planes and trains (EC transport only)	Place of departure
Intermediary services	Same place as the underlying transaction
Intra-community transport of goods	The place of departure
Transport of goods	Where transport takes place proportionate to distance covered
Ancillary transport services	Where performed
Services of valuation or work on goods	Where performed
Non-EC to EC electronically supplied services	The customer’s member state
EC to non-EC intangible services	Non-EC customer’s country
Intra-EC cross border supplies of telecoms, broadcasting and electronically supplied services	From 1 January 2015 where customer belongs. This will require registration in the customer’s member state or the use of a new One-Stop Scheme.