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VAT on electronic services - Verify place of use?

My business will soon supply electronic services worldwide. I think I understand the implications of this with regard to VAT. I'm unsure though what 'proof' I need for where the goods are 'used and enjoyed'.

I can find out where the customer 'belongs' from their address. That's fine. However, is it sufficient just to ask where the services and 'used and enjoyed' and take that in good faith?

As far as I understand, a UK business could buy our service for their US branch and would not be liable for VAT. I don't see any way of 'proving' this, other than asking them directly.

Would appreciate any advice,

Nick H

Reply to
Nick H
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I wish more companies would make the same effort as you are to determine whether to charge VAT. I live outside the EU for most of the year and often end up having to pay VAT on electronic services I order online simply because my credit card billing address is in the UK.

Chris

Reply to
Chris Blunt

Having spent a morning wading through the rules and regulations I can see why most do .. it's easier and safer to just go on the customers billing address.

In my personal opinion, this stuff is crazy. What happens if someone, maybe like yourself, spends their time 50% outside the EU and 50% in the uk? Do we ask for an email whenever they fly for our billing software? A copy of their flight tickets? VAT just doesn't work for browser based, monthly billed services.

But .. I'll press on with this "Used and Enjoyed" condition until I get a clear answer. I've sent an email to my tax office asking how much proof I need of that. I fully expect a vague and useless answer :)

It a shame that despite being behind the US technology wise, the UK wont let you compete on the same level as a US company, and we have to burden our customers with this rubbish.

Rant over .. :)

N
Reply to
Nick H

"Nick H" wrote

Let us know what they say!

Reply to
Tim

Well, I wish you luck finding out. I've had fun when I've supplied services to a multinational client and have dealt mainly with an office in the UK but sent the invoice to an office outside the UK. I phoned the VAT helpline on this one, who told me that they were not allowed to issue advice about a specific case, which I thought sounded a bit odd. Instead, they directed me to a guidance leaflet. The advice in this was rather vague, and suggested that if you still weren't sure, you should phone the VAT helpline. Not very useful advice if the VAT helpline won't offer an opinion.

Seems to me that this is a bit of a grey area. If this is going to crop up often, I'd suggest finding a good accountant who specialises in tricky VAT issues.

Good luck! Adam

Nick H wrote:

Reply to
Adam

The rules for doing this are explained here

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Reply to
Jonathan Bryce

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The rules for finding out where the customer is *located* are there. That's fine, we can use their credit card billing address.

The rules for finding out where the services are 'used and enjoyed' remain vague to my knowledge.

N
Reply to
Nick

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