VAT B2B UK>EU Thread poster: Will Kelly
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Hi all. I provide translation services through a UK-based, VAT-registered limited company. I have a B2B customer in the Netherlands. My company does not have an office in the Netherlands or anywhere outside the UK. My understanding is that prior to Brexit and now during the transition period VAT should be charged by UK entities to entities in other EU countries at 0% B2B and 20% B2C. However, my B2B customer has asked a question that has led me to seek a more sophisticated understanding of the m... See more Hi all. I provide translation services through a UK-based, VAT-registered limited company. I have a B2B customer in the Netherlands. My company does not have an office in the Netherlands or anywhere outside the UK. My understanding is that prior to Brexit and now during the transition period VAT should be charged by UK entities to entities in other EU countries at 0% B2B and 20% B2C. However, my B2B customer has asked a question that has led me to seek a more sophisticated understanding of the matter. Specifically, he asked me whether 0% would apply because of the 'reverse charge mechanism'.
Having checked current information from HMRC, it seems likely that this is the right explanation:
https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec5
As I understand this, I charge him VAT @ 0%, and he enters an equal number in both his input and output sections on his VAT return, meaning the net amount he pays in VAT for the service rendered is zero. Is that how others understand the VAT rules? ▲ Collapse
| | | | | Not your problem | Nov 19, 2020 |
Yes, that is how I understand it. But how he handles it in the Netherlands is his problem and might differ from the UK rules.
// On re-reading, that sounds a bit abrupt, which isn’t the intention. You don’t charge him VAT is the key thing.
[Edited at 2020-11-19 12:47 GMT]
// But you do still need to put him on your EC sales list for the rest of this year. Will be glad to see the back of that extra admin.
[Edited at 2020-11-19 12:49 GMT]
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More importantly, what's happening with reverse charging as of January (both ways)? Do we "Continentals" treat UK clients as we would Kazakhs? Or is this another wait-and-see? Gosh, I'd better look this up.
| | | | Samuel Murray 
Netherlands
Local time: 04:41
Member (2006)
English to Afrikaans
+ ...
Chris S wrote:
Yes, that is how I understand it. But how he handles it in the Netherlands is his problem and might differ from the UK rules.
I agree with Chris here. He (i.e. the client) should not try to figure out how to deal with it by looking at your situation. Even though there is cooperation between EU countries w.r.t. VAT, the internal tax rules of each country are not all the same. All businesses in the Netherlands have a VAT number, so he should tell you his VAT number and you then put his VAT number on your invoice. I believe you should also add some kind of wording (in the Netherlands, we write "VAT shifted" and simply leave out any further mention of VAT). I can't comment on what your customer would need to do though, since I've never seen the process from a client's side.
Chris, what do you put on your invoice for EU clients -- do you actually put "0% VAT" or do you write something like "VAT shifted" and then omit any further mention of VAT?
[Edited at 2020-11-19 14:58 GMT]
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Samuel Murray wrote:
Chris, what do you put on your invoice for EU clients -- do you actually put "0% VAT" or do you write something like "VAT shifted" and then omit any further mention of VAT?
They just say £0.00 in the column for VAT. We don’t have to add any text.
| | | | Will Kelly
United Kingdom
Dutch to English
TOPIC STARTER | Thanks guys! | Nov 19, 2020 |
Thanks to you both! Yes, this coheres with my understanding. I've being specifying VAT at 0%. This customer wants me to add that it's at 0% due to the reverse charge mechanism, which I'm happy to do.
| | | | RobinB
United States
Local time: 21:41
German to English
| Long story short: | Nov 20, 2020 |
Stuart Hoskins wrote: More importantly, what's happening with reverse charging as of January (both ways)? Do we "Continentals" treat UK clients as we would Kazakhs? Or is this another wait-and-see? Gosh, I'd better look this up.
The Borat solution is correct.
From January, the UK and the EU are on different planets for VAT purposes (and many others, of course), so reverse charge no longer applies. No VAT on UK invoices to EU customers, no VAT on EU invoices to UK customers.
If you're an ITI member, the following may be of interest to you:
"Your Brexit VAT questions answered
If you need help finding the answers to your questions about how to deal with VAT post Brexit then this is for you.
We are joining with members of the CIoL to put questions to VAT specialist Steve McCrindle of accountants Haines Watts in a pre-recorded webinar that will support all professionals with consistent and reliable information.
If you have a VAT question that you would like answered by our specialist, please send it to [email protected] by 5pm on Monday 23 November.
The webinar recording will be made available to all members via the ITI website."
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