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Whenever you supply services, then for VAT purposes, it is essential to know the 'place of supply'. This determines which country's VAT rules should be used and how you have to account for the VAT on the sale.
If you are supplying services abroad, then the place of supply is not always obvious.
This guide explains the rules you must use to work out the place of supply of services.
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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:
The rules for the place of supply of services changed on 1 January 2010 along with other changes to the VAT rules for international transactions.
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.
Find out how to charge and account for VAT on the goods or services that you supply
If you are in the UK and the place of supply of your service is in another EU country, the supply is outside the scope of UK VAT. However, for some supplies, you may need to register and account for local 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.
Find a list of EU VAT contacts in Notice 725
If the place of supply of your service is not in the EU, then your supply of services is outside the scope of VAT. You don't have to charge EU VAT or include the sale on your VAT Return.
There are special arrangements for electronically supplied services.
For most supplies of services, the place of supply is decided by what is known as the 'general rule'. However, some supplies are subject to special rules that will affect their place of supply (see the section below on special rules).
| You supply services to a: | The place of supply is: |
|---|---|
| business customer | the place where the customer belongs |
| non-business customer | the place where the supplier belongs |
You belong in the UK if:
A business can have only one business establishment, but can have several fixed establishments.
If you have a business establishment in the UK and establishments in other countries, you need to look at what each establishment does in terms of supplying services. If, for example, your company has its head office in the UK, but has a French subsidiary that supplies services to local businesses, then the French company belongs in France for VAT purposes. This is the case even if your head office belongs in the UK for supplies that it makes in the UK.
In some cases, the place of supply is determined by what service is supplied, rather than where the supplier or the customer belongs.
A means of transport is something that can actually be used for transporting passengers or goods, and includes road transport, caravans and trailers, motor cycles and bicycles, ships, yachts, aircraft, and railway rolling stock. It doesn't include freight containers, static caravans or racing cars.
Working out the place of supply when you are hiring out a means of transport depends upon the length of time that you hire out the vehicles for.
These special rules only apply to the transport itself. The services of a driver, pilot, operator or crew would come under the general rule.
More about the VAT rules for transport services in Notice 741A
If you're supplying services relating to land and property, then the place of supply is always where the land or property is located.
Land and property includes the land itself plus any buildings or other structures, (including installations such as oil production platforms). Machinery installed within a building is not considered to be land or property.
Land a property services include:
More about VAT on land and property services in Notice 708
The place of supply of admission to an event is the where the event takes place, irrespective of where the customer or supplier is located. These include such services as:
If the customer is a non-business customer then most supplies relating to events are subject to VAT where they are carried out. This includes all services connected to cultural, artistic, sporting, scientific and educational events, or entertainment.
Intermediaries provide a service of arranging or facilitating the supply of goods or services. They are often called brokers or agents, and their customer is the person or organisation to which they supply their service. This can be the supplier or the buyer of the goods or services, or both.
If you are an intermediary, then the place of supply of your services depends on whether your customer is in business.
| You supply intermediary services to a: | The place of supply is: |
|---|---|
| business customer | the place where the customer belongs |
| non-business customer | the same as the place of supply of the service being arranged |
Special rules apply for work carried out on goods.
Goods in this context means movable items, not fixed installations. Work includes any kind of physical service, including valuation, processing, manufacturing, repairs and maintenance, and alterations or finishing.
| You supply services to a: | The place of supply is: |
|---|---|
| business customer | the place where the customer belongs |
| non-business customer | where the work is physically performed |
For passenger transport the place of supply is where the transport takes place. If it takes place outside the UK, then it falls outside UK VAT rules.
For freight transport the place of supply varies according to whether the customer is in business.
| You supply services to a: | The place of supply is: |
|---|---|
| business customer | the place where the customer belongs |
| non-business customer | where the transport takes place |
More about VAT and transport in Notice 744B
There are certain, mainly intangible, services that are outside of the scope of UK VAT when supplied to non-business customers who belong outside the EC. These include advertising, intellectual property rights, legal services and accountancy.
More about services supplied to non-business customers outside the EC
If you belong in the UK and your customer is in another EU country, you may need to register in that country. You will need to contact the tax authority in that country for advice.
