Place of supply for service of goods from China for incorporation into goods in Vietnam?

Question

We’re a UK business arranging for the service of goods from China for incorporation into goods in Vietnam. Is the place of supply in UK? What about VAT liability?

This question was asked during our VAT Fundamentals webinar. You can watch the webinar at http://opentoexport.com/info/webinars/#VAT_fundamentals

Answer

Hi Brian,

there would be more detail required on the situation to be able to answer this and thus its difficult to respond. I’ll signpost you to notice 703 on Exports and Notice 741a on Services.

Happy to help of course but difficult to offer general commentary.

Regards, Liz

Answer

What ‘place of supply’ means

The place of supply is the place where a supply is made and where VAT may be charged and paid. With services, deciding the place of supply can be complicated. There are various rules that apply, depending on:

  • whether you have more than 1 business location
  • the kind of service you provide
  • the place where your business or your business customer ‘belongs’

Which country’s VAT rules to use when charging VAT on services

If you are in the UK and the place of supply of your service is in the UK, you charge and account for VAT according to UK VAT rules.

Answer

If you are in the UK and the place of supply of your service is in another EU country, you don’t pay UK VAT. However, for some supplies, you may need to register and account for VAT in the country of supply. You will need to check with the tax authority in that country to find out how to treat the services you are supplying. A list of EU VAT contacts can be found in Notice 725.

If the place of supply of your service is not in the EU you don’t have to charge EU VAT but you should include the sale in box 6 on your VAT Return.

HM Revenue & Customs

Customs International Trade & Excise

www.hmrc.gov.uk/contactus

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