VAT B2B France
Question
We are a Vat UK business supplying translation services to the UK and Europe. Standard B2B rules apply and reverse charge rules are applied to vat registered businesses in Europe.
One of our customers is based in France and is a start-up business so non-vat registered as turnover below both UK and France thresholds.
Complication is – he has registered his business in the UK via one of these websites that handles bulk registrations. He has no physical location in the UK and our translation services {documents sent by post/email} are supplied directly to France and as far as I am aware, he has the one customer in France.
Call it bad accountants advice but I don’t even think he is registered in France as a business {Siret?} despite being a French national and solely based in France.
Question is, am I as a UK company able to zero rate our supplies? Is the fact that the business is a internet UK registered business a red herring and can I treat his business as having a fixed location in France.
Obviously no vat/tva number as proof and at present our invoices are addressed to the UK resistered address in London despite the supply being totally French based.
Obviously I need to protect our business whilst at the same time not ruining his business. Can he voluntarily register for Vat in France, does he have to register as a business in France – haven’t got a clue why registered in the UK?
Any help appreciated.
Kind Regards,
Steve
Answer
You can treat the service as B2B and not charge VAT providing you can show that your customer belongs outside the UK and does not receive your supply for a wholly private purpose. Where your customer is unable to provide a VAT number, you can accept alternative evidence, which includes certificates from fiscal authorities, business letterheads or other commercial documents indicating the nature of the customer’s activities.
Paragraph 3.2 of VAT Notice 741A – Place of supply of services advises when you belong in the UK for the purposes of receiving supplies of services. Providing your customer belongs in France (and not the UK), you can exclude UK VAT. If they belong in the UK, you are required to charge it.
I assume that your customer is registered for VAT in the UK because he makes taxable sales here, otherwise there is no requirement to do so. Your customer would need to contact the VAT Registration Unit to find out why he is registered in the UK as it is presently unclear. The contact details can be found within VAT Notice 700/1 – Should I be registered for VAT? https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat
With regard to registering in France, he would need to contact the French Tax authorities as we could not advise on the requirements in France. Details of contact addresses and other useful information provided by the VAT authorities in other Member States can be found on the European Commission website:
HM Revenue & Customs
Customs International Trade & Excise
Answer
Many thanks for your respone. Just one difficulty to overcome. At present, being a start-up company, our customer will fall short of both UK and French thresholds for Vat. So, he is not registered in either country for Vat.
The complication is where he is registered as abusiness and I guess a question of where he "belongs". In real terms, he is based solely in France with our translations electronically sent from the UK to France. His customers are French but to my knowledge he is not registered in France as a business. This is despite the commercial reality – supply of services and payments of invoices being actioned in France.
Instead, and his comes the complication, he is registered as a Ltd company through one of these internet companies {Rapid Formations?} offering a UK registered address despite having no physical presence in the UK.
Not sure where he got his advice from but this may class his company as being a UK company and hence our invoices should be vatable. With my limited knowledge, could he be classed as a fixed location and hence non-vatable.
Hope you have some insight into this.
Kind Regards,
Steve
Answer
You can treat the service as B2B and not charge VAT providing you can show that your customer belongs outside the UK and does not receive your supply for a wholly private purpose. Where your customer is unable to provide a VAT number, you can accept alternative evidence, which includes certificates from fiscal authorities, business letterheads or other commercial documents indicating the nature of the customer’s activities.
Paragraph 3.2 of VAT Notice 741A – Place of supply of services advises when you belong in the UK for the purposes of receiving supplies of services. Providing your customer belongs in France (and not the UK), you can exclude UK VAT. If they belong in the UK, you are required to charge it.
I assume that your customer is registered for VAT in the UK because he makes taxable sales here, otherwise there is no requirement to do so. Your customer would need to contact the VAT Registration Unit to find out why he is registered in the UK as it is presently unclear. The contact details can be found within VAT Notice 700/1 – Should I be registered for VAT? https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat
With regard to registering in France, he would need to contact the French Tax authorities as we could not advise on the requirements in France. Details of contact addresses and other useful information provided by the VAT authorities in other Member States can be found on the European Commission website:
HM Revenue & Customs
Customs International Trade & Excise