How to work out your place of supply of services for VAT

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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What is the 'place of supply'?

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 one 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.

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.

Broadcasting, telecommunications and e-services

There are special arrangements for electronically supplied services.

Find out more about the special arrangements for charging VAT on supplying electronic services internationally (Opens new window)

On 1 January 2015, changes will be made to the European Union (EU) VAT place of supply of services rules involving business to consumer supplies of broadcasting, telecommunications and e-services (BTE).

Read more about changes to the VAT place of supply rules

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The general rule and the place of belonging

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).

The general rule for working out the place of supply of services (apart from those covered by 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

Is your place of belonging in the UK?

You belong in the UK if:

  • your business establishment (your head office or only office) is in the UK, and you have no fixed establishments (subsidiary offices or agencies) in other countries
  • your business establishment is in the UK and you have fixed establishments in other countries, but the UK office is the one mainly concerned with supplying services
  • your business establishment is not in the UK but you have a fixed establishment here which is the one from which you supply services
  • you don't have either a business or fixed establishment in the UK or elsewhere, but your business is a corporate body (eg, a limited company) which is registered in the UK
  • you have don't have a business or a fixed establishment in the UK, or anywhere else, but the UK is your usual place of residence

A business can have only one business establishment, but can have several fixed establishments.

Can you belong in more than one place?

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.

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Special rules for the place of supply

In some cases, the place of supply is determined by what service is supplied, rather than where the supplier or the customer belongs.

Hiring out a means of transport

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.

  • Long term hires (those lasting more than 90 days for boats and ships or more than 30 days for other vehicles) come under the general rule (see the section above).
  • For short term hires the place of supply is where the vehicle is physically given over to the customer.

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

Land and property services

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:

  • construction, refurbishment, conversion, repair, maintenance and demolition
  • professional services of estate agents, architects, surveyors, etc
  • property management and maintenance services

More about VAT on land and property services in Notice 708

Events

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:

  • entertainment and cultural performances - including sports events
  • the right to attend exhibitions, conferences, meetings or seminars
  • ancillary services - such as payments for cloakrooms or similar facilities

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

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.

The rule for working out the place of supply of intermediary services
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

Work carried out on goods

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.

The rule for working out the place of supply of work carried out on goods
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

Transport

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.

The rule for working out the place of supply of freight transport
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

Services supplied outside the EC

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

Registering for VAT under special rules for place of supply

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.

Find a list of EU VAT contacts in Notice 725

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