​

​

​

Introduction

​

​

The place of supply rules are an important aspect of VAT as they determine if a supply takes place within or outside the UK and as such whether VAT applies to a supply or not.

​

​

Place of supply of Goods

​

• Goods supplied to customers in the UK and remain in the UK are subject to UK VAT.  This includes goods purchased from a supplier who assembles them and they are not removed from the UK.

• Goods supplied to overseas customers where the goods are removed or assembled outside the UK are outside the scope of UK VAT

​

​

Place of supply of Services

​

The place of supply of services primarily depends on what service is being supplied and whether the supply is to a Business Customer (B2B) or a Private Individual (B2C). 

​

​

General Rules

​

The general rules as per the VAT Act 1994 for (B2B) and (B2C) are as follows:

​

• The place of supply for Business to Business supplies (B2B) is where the customer belongs  

• The place of supply for Business to Customer (private individuals, charities or government organisations) supplies (B2C) is where the supplier belongs

​

 

​

​

​

Services Supplied in UK to UK Customer

 

​

• Taxable services supplied by UK VAT Registered Businesses to UK Business Customers (B2B) = VAT Applicable on the Supply

• Taxable services supplied by UK VAT Registered Businesses to UK resident private individual (B2C) = VAT Applicable on the Supply

​

For example - if a UK business supplies legal services to a private individual in the UK then 20 % VAT would be applicable 

​

Services Supplied to a Non - UK Customer

​

• Taxable services supplied by UK VAT Registered Businesses to Non UK Business Customers (B2B) = Zero Rated 

• Taxable services supplied by UK VAT Registered Businesses to a Non UK resident private individual (B2C) = 20% VAT Applicable on the Supply

​

B2B - Supplies to Non UK Customers Evidence

​

Where UK businesses are providing services to non UK business customers, they must satisfy themselves that the customer is actually in business. 

​

This is normally evidenced primarily by the following:

• The customer providing a VAT registration number and then verifying via the Vies system if in the customer is in the EU or other local government VAT number checkers. 

• The company having a registration number with their local registrar of companies.

• Corporation or other local business tax number  

​

 Note: If a UK business cannot verify that the customer they are supplying is in business, then HMRC requires them to charge 20% VAT on their supply similar to if they were supplying a non UK resident private individual.  Basically Treat the supply as a B2C supply.

​

For example if a UK company is supplying accountancy services to a company in Germany but it has received no information such as a VAT registration number or company number or any other evidence to verify that it is actually in business, then the UK company should charge 20% VAT on the supply.

​

B2B - Supplies to Non UK Customers that Make both Business and Non Business Supplies

​

Where a UK business makes supplies to non UK organisations that have both business and non business activities such as charities or Government organisations, then the supply should be treated as B2B and treated as outside the scope of UK VAT / Zero Rated.

​

If on the other hand the charity or Government organisation was only carrying out non business activities, then the supply should be treated as B2C and VAT applied at 20% accordingly.

​

Establishment and the place of Supply

​

The Establishment most closely linked with a supply will usually determine whether or where VAT is applicable.   

​

Where an establishment is actually providing the services, this should normally be reflected in the contract. However, where the contract conflicts with the substance and reality of the situation, the supplier should normally be treated as belonging at the establishment from which the services are actually provided.

​

For example if company (A) in Germany contracts with customer (B) in Germany to supply consultancy services to its London Branch (C) and the actual consultancy services are provided by (A's) London registered company then the place of supply will be seen as the UK and as such 20% reverse charge VAT would be applicable as the contract for services is in substance between Company (A) and the London Branch of (B) company (C)

​

Key Indicators for Determining the Establishment Most Closely Linked with a Supply 

​

• Where are the necessary human and technical resources (for example database, technical equipment, office equipment, telephones, and so on) for actually providing the services permanently based

• Which establishment appears on the relevant contracts, correspondence and invoices

• Does reference to the preferred establishment lead to a more appropriate or rational result for tax purposes

• What is the significance of the activities carried out at each establishment in contributing to the services provided

​

​

Services where Place of Supply General Rules do not Apply

​

Land and Property Related Services

​

The place of supply of services related to land and buildings is where the actual property is located and not where the supplier belongs

​

This includes:

​

• Purchase and sale of Land 

• Estate agents, surveyors, architects, engineers etc involved in land related transactions 

• Hotels and accommodation

• Construction, alterations, demolition, repairs and maintenance, engineering in relation to land and buildings

​

Admission to Event

​

The place of supply for admission to an event is where the event takes place. By events we mean sporting, conferences, exhibitions, music events etc.

​

For Example - a company in the UK buying tickets to a rugby match held in Ireland to entertain staff.  The place of supply in this case is Ireland.

​

Note: The following services provided Are not Admission to an Event and the place of supply of these services is covered under the general rule - B2C = where the supplier is located and B2B where the customer is located.  (Unless only the admission is provided which gives the right to attend an event)  

​

• Sporting event services such as appearances by sports personalities for a fee or organisation of race events or tournaments

• Educational services such as conferences organised and supplied to businesses. 

• Entertainment services such as performances by artists, DJ's where their services are hired.  

• Exhibitions 

​

Hire of Means of Transport

​ 

The hire of short term transport (30 continuous days for cars, vans, bikes, scooters etc and 90 continuous days for vessels) is to be treated as made in the country in which the means of transport is actually put at the

disposal of the person by whom it is hired.

​

So if a van is hired by a UK business from a French van hire company to use while setting up its French office, then UK reverse charge VAT would not be applicable as the place of supply is in France and thus outside

the scope of UK VAT. 

​

​

​

  

Catering and Restaurant Services

​

The place of supply rules for restaurant and catering services is the country where the actual physical supply takes place.

​

​

Use and Enjoyment Rules

​

Use and employment rules apply mainly to telecommunications, broadcasting and electronically supplied services.

 

Basically the use and enjoyment for these services take place in the country they are consumed and as such do not follow the general rule. 

 

​

For Example: 

 

 

If a UK business provides telecommunication services to a UK business customer but the actual services are consumed in France, then  the place of supply is France and is outside the scope of UK VAT. 

​

​

If a Spanish satellite broadcaster provides broadcasting services to UK consumers, then the place of supply would be where the broadcasts are consumed and thus UK VAT will be applicable. 

​

                       

If a UK business purchases software from a Irish vendor and is used in its Jersey office only, then the supply would be outside the scope of UK VAT as the services are consumed in Jersey.  

​

​

If a German company purchased web hosting services from a US company and the web hosting is used primarily in the UK, then as these services are consumed in the UK VAT is applicable.

​

​

​

​

​

​

​

​

​

​

​

-Contains public sector information licensed under the Open Government Licence v3.0.

​

​

​​