VAT - Buying and selling goods and

Transcription

1 VAT - Buying and selling goods and services within the EU Hello and welcome to this AAT webinar on VAT - Buying and selling goods and services within the EU We are due to start at 19:00. You should not have any sound at this stage. We will be doing a sound check at 18:55 When you logged into the webinar you will have been asked if you wanted to participate in a Integrated Voice conference if you did not click yes to this then you will not have any sound. Please log out, re-join the webinar and answer yes. If you have any questions during the webinar please use the Q&A panel on the right hand side and direct your questions to all panellists. For more information on participating in a webinar see our user guide; AAT webinars what they are and how to take part' at aat.org.uk/webinars

2 VAT - Buying and selling goods and services within the EU Alex Millar FMAAT CTA AIIT Director- AM VAT Limited 1 May 2014

3 Seminar content An overview of: VAT on intra-eu supplies of goods and services. The distance selling rules. New rules for broadcasting, telecommunications and e-services sold to consumers from 1 January 2015.

4 VAT in the EU The UK is one of the 28 Member States of the EU - Croatia became a Member State on 1 July The VAT law in each Member State should reflect the objectives of the EU Principal VAT Directive. Rules determine which Member State s VAT applies to intra-eu supplies of goods and services.

5 The general rule for intra-eu supplies For business to business (B2B) sales VAT is due in the Member State where the customer belongs. For business to consumer (B2C) sales VAT is due in the Member State where the supplier belongs. There are exceptions to the general rule.

6 Example 1 Goods bought Ann, a VAT registered accountant based in the UK, needs new office equipment for her business. Ann orders the goods from a supplier in Poland. What is the VAT treatment of the goods?

7 Example 1 - What is the VAT treatment of the goods? A. The supplier in Poland should zero-rate the sale. B. The UK customer (Ann) should account for the UK VAT. C. Both A and B. D. The supplier in Poland should charge UK VAT.

8 Example 1 - What is the VAT treatment of the goods? For B2B sales VAT is due in the Member State (the UK) where the customer (Ann) belongs. If the supplier in Poland registered for VAT in the UK it could charge UK VAT (D). However, instead of this The supplier in Poland can zero-rate the sale and show Ann s UK VAT number on the invoice (A) Ann should include the UK VAT due on the computer in box 2 of her VAT return (B) Answer C both A and B.

9 Goods bought - What are the UK VAT return entries? The UK VAT due on goods acquired by a UK business from a supplier in another EU Member State should be included in box 2. The appropriate amount of input tax is claimed in box 4. The VAT exclusive value of the goods acquired, and related costs such as delivery charges included on the same invoice as the goods, should be included in boxes 7 and 9.

10 Example 2 Goods sold Ben, a VAT registered wholesaler based in the UK, sells desks to VAT registered businesses throughout the EU (B2B) Ben receives an order from a customer in Italy What is the VAT treatment of the goods?

11 Example 2 - What is the VAT treatment of the goods? A. Ben should zero-rate the sale B. The Italian customer should account for the Italian VAT C. Both A and B D. Ben should charge Italian VAT

12 Example 2 - What is the VAT treatment of the goods? For B2B sales VAT is due in the Member State where the customer belongs. If Ben registered for VAT in the Italy he could charge Italian (D) However, instead of this Ben can zero-rate the sale and show the Italian customer s VAT number on the invoice (A). The Italian customer should account for the Italian VAT (B). Answer C both A and B.

13 Goods - Triangulation Triangulation is the term used to describe a chain of intra-eu supplies of goods involving three parties in different Member States. The goods are delivered directly from the first party to the last party in the chain.

14 Example 3 - Triangulation A German company orders goods from a UK company and the goods are delivered from a French company to the German company.

15 Example 3 - Triangulation The UK company is the French company s customer and will receive an invoice from the French company. The French supplier can zero-rate the sale and show the UK company s VAT number on the invoice. The UK company is both acquiring and supplying the goods in Germany so would normally be required to register for VAT in Germany unless a simplified VAT procedure is used.

16 Example 3 - Triangulation The simplified procedure avoids the need for the UK company having to register for VAT in Germany. The simplified procedure means that the UK company can zero-rate the sale and show the German company s VAT number on the invoice. The simplified procedure can only be used when all three parties are registered for VAT.

17 Example 4 Services bought Kim uses a Spanish business to provide her UK business with IT support services. What is the VAT treatment of the services?

18 Example 4 - What is the VAT treatment of the services? A. The Spanish supplier should charge Spanish VAT B. Kim should charge herself UK VAT C. The Spanish supplier should charge UK VAT

19 Example 4 - What is the VAT treatment of the services? For B2B sales VAT is due in the Member State where the customer belongs For B2C sales VAT is due in the Member State where the supplier belongs The services are provided to Kim s business (B2B) so Kim can charge herself UK VAT via the reverse charge (B)

20 What is the reverse charge? For business to business (B2B) sales the general rule is that VAT is due in the Member State where the customer belongs The reverse charge applies to most B2B supplies of services, except services that are exempt from VAT or are zero-rated The reverse charge occurs when the customer accounts for VAT as if the customer was the supplier

21 What are the UK VAT return entries? The UK VAT due on the services is included in box 1 (reverse charged as if the customer was the supplier) The appropriate amount of input tax is claimed in box 4 (as normal) The value of the supply is included in box 6 (as if the customer was the supplier) The value of the supply is included in box 7 (as normal)

22 Example 5 Services sold Dan is a VAT registered accountant based in the UK. Most of Dan s clients are based in the UK but some are based in Belgium. He prepares accounts for businesses (B2B) and personal tax returns for individuals (B2C). When should Dan charge UK VAT?

23 Example 5 - When should Dan charge UK VAT? A. On all invoices. B. Only on the invoices issued to UK clients. C. On the invoices issued to UK clients and to businesses in Belgium. D. On the invoices issued to UK clients and to consumers in Belgium.

24 Example 5 - When should Dan charge UK VAT? Remember the general rule: For B2B sales VAT is due in the Member State where the customer belongs. For B2C sales VAT is due in the Member State where the supplier belongs. The correct answer is D - on the invoices issued to UK clients and to consumers in Belgium.

25 Intra-EU transactions - Other reporting requirements An EC Sales List (ESL) should be submitted showing details of goods and services sold to VAT registered customers in other Member States An Intrastat Supplementary Declaration should be submitted if the value of arrivals (goods bought from) or dispatches (goods sold to) VAT registered businesses in other Member States exceeds certain thresholds.

26 Intrastat Supplementary Declaration thresholds From 1 January 2014 the Intrastat Supplementary Declaration threshold for: Arrivals is 1,200,000 Dispatches is 250,000

27 The general rule for intra-eu supplies For business to business (B2B) sales VAT is due in the Member State where the customer belongs. For business to consumer (B2C) sales VAT is due in the Member State where the supplier belongs. There are exceptions to the general rule.

28 Exceptions to the general rule For details of exceptions to the general rule see: HMRC Notice 725 (The single market). HMRC Notice 741A (Place of supply of services). An example of an exception to the general rule is B2C sales of goods that exceed the distance selling thresholds.

29 Distance selling The general rule for B2C sales is that VAT is due in the Member State where the supplier belongs. Distance selling is the term used to describe sales of goods to customers in other Member States where the customer is not registered for VAT and the supplier is responsible for delivery of the goods. Examples of businesses involved in distance selling are mail order companies and online retailers.

30 Distance selling When distance sales exceed certain thresholds VAT is due in the Member State where the customer belongs instead of the Member State where the supplier belongs. Each Member State has a threshold. The threshold for distance sales to customers in the UK is 70,000 for a calendar year. There is no threshold for distance sales of excise goods VAT is due in the Member State where the customer belongs regardless of the value involved.

31 Example 6 - Distance selling A company based in Luxembourg sells millions of pens over the internet to private individuals in Luxembourg, the UK and Croatia. The selling price for each pen is 1.00 (or the local currency equivalent). VAT rate in Luxembourg 15% VAT rate in the UK 20% VAT rate in Croatia 25%

32 Example 6 - Distance selling If the distance selling rules did not exist the company could account for VAT of 0.13 (or the local currency equivalent) for each pen sold. VAT rate in Luxembourg 15% 1.00 x 15/115 = 0.13 The general rule for B2C sales is that VAT is due in the Member State where the supplier belongs, in this case the supplier belongs in Luxembourg.

33 Example 6 - Distance selling The distance selling rules do exist. The company should account for VAT in the UK of for each pen sold in the UK. VAT rate in the UK 20% 1.00 x 20/120 = The company should account for VAT in Croatia equivalent to 0.20 for each pen sold in Croatia. VAT rate in Croatia 25% 1.00 x 25/125 = 0.20

34 Distance selling explanation The distance selling rules are intended to combat distortion of trade and unfair competition If the distance selling rules did not exist the variations in VAT rates between Member States may encourage mail order companies and online retailers to locate their businesses in Member States with relatively low rates of VAT

35 New rules for BTE services from 1 January 2015 New rules for broadcasting, telecommunications and e-services (BTE) sold to consumers For B2C sales of BTE services VAT is due in the Member State where the supplier is located until 31 December 2014 From 1 January 2015 VAT is due in the Member State where the consumer is located How will suppliers know where consumers are located?

36 BTE services - consumer location Examples: Broadcasting services supplied via a decoder - the address where the decoder is sent or installed Services supplied via a phone landline - the location of the landline Services supplied via a mobile phone - the country code of the SIM card Services provided via an internet café or a wi-fi hot spot - the location where the services are provided

37 What is an e-service? An electronically supplied service (e-service) is supplied via the internet, or a similar electronic network, and involves minimal human intervention. Examples include: Software and software upgrades Website supply and hosting Online music, films and games

38 How to account for VAT on e-services from 1 January 2015 Suppliers of BTE services to consumers can register for VAT where their customers are located. Alternatively suppliers can register to use the Mini One Stop Shop (MOSS). The MOSS is to be available from 1 January HMRC have said business can register to use the MOSS from October 2014.

39 What is the MOSS? The MOSS (Mini One Stop Shop) is an online service that is intended to allow suppliers of BTE services to consumers the option of accounting for the VAT due in all the other Member States by submitting a single return to HMRC. The alternative is for suppliers of BTE services to consumers to register for VAT where the consumers are located.

40 Any questions???

41 Disclaimer The Association of Accounting Technicians, Alex Millar, and AM VAT Limited cannot accept responsibility for any loss occasioned by any person attending the webinar or using the webinar notes.

42 Thank you I hope you enjoyed the webinar.

43 VAT - Buying and selling goods and services within the EU Thank you for attending this AAT webinar on VAT - Buying and selling goods and services within the EU Please take some time to fill in the online questionnaire to help us plan and improve future webinars. This will pop-up in your web browser when you leave the webinar. A recording of the webinar will be available to view online. We will a link to all attendees once the recording is available. Thank-you and good night