International Supplies

For businesses that trade internationally, understanding the VAT implications of their supplies is important to meet international VAT obligations and this will also inform the method by which a business may recover input VAT incurred abroad in the course of making supplies of services internationally.

The VAT treatment of supplies made internationally varies depending on whether these are supplies of goods or services, as each has its own distinct VAT rules. Guidance surrounding international supplies of goods can be found on our import/export page.

With respect to the VAT obligations arising from an international supply of services, it is important to consider the nature of the services themselves in addition to the location and status of the recipient.

At The VAT People, we specialise in supporting businesses to meet their VAT obligations on international supplies of services consistently. We can help your business optimise its VAT recovery position in relation to international trade. Call our helpline on 0161 477 6600, or fill in the online query form on this page and we will be in touch.

Place of supply rules - services

To determine where a supply of services is liable to VAT, it is necessary to consider the rules of supply for services, which determines where a supply takes place for VAT purposes and therefore where VAT is due.

The general place of supply rules for services state;

• B2B: where supplies are made to business customers, VAT is due with reference to the country where the customer belongs.
• B2C: where the customer is a non-businessperson, VAT would be due in the country where the supplier belongs.

However, there are a number of exceptions to this general rule, such as in relation to supplies of land-related services or supplies of installed goods, which may require a business to register and account for VAT in the country in which the land or installation is located, as this is where the supply will be subject to VAT. With a business's VAT obligations depending on the nature of the services and their place of supply, it's important to confirm the appropriate means of VAT accounting at the earliest opportunity.

Where supplies fall under the general place of supply rule, the customer may be required to self-account for VAT under the reverse charge mechanism in their country of establishment, and so an understanding of how this mechanism works in practice is required to accurately account for the VAT on such services.

The reverse charge mechanism may also apply to UK VAT-registered businesses purchasing services from suppliers located abroad (although this is dependent on the place of supply of the relevant service).

The VAT People can assist businesses in understanding their obligations to pay the reverse charge obligation on international services supplied and whether they will be obligated to charge UK VAT on services.