VAT on legal services for non Eu resident


VAT on legal services for non Eu resident

Postby YH on Fri Feb 27, 2009 9:57 pm

A UK based solicitor provides legal services (obtainment of documents, notarization of such, etc.) in the UK for a non resident, non Eu based corporation (the "Orderer"). Does this transaction attract VAT, and if yes at what rate, 0% or 17.5%? If yes, can the orderer reclaim the VAT?
YH
 
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Re: VAT on legal services for non Eu resident

Postby SeanJames on Sat Feb 28, 2009 11:03 am

Hello,

Possibly not. Solicitors services do qualify under schedule 5 of the VAT Act 1994 (it is a deemed a supply where your customer belongs) and providing you can evidence that this is the case, then you service should be outside the scope of UK VAT and as such not attract any UK VAT.

If you look through section 13.5 of notice 741 - Place of Supply of Services (type 741 into the search box on http://www.hmrc.gov.uk), it explains this in more detail and will provide you with information as to when VAT may be applicable (i.e if land/property is involved then it's liable where the land/property is located)

Hope this helps.

Sean
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Re: VAT on legal services for non Eu resident

Postby YH on Sat Feb 28, 2009 5:10 pm

Dear Sean,

Thank you very much for your prompt and very instructive reply. It seems that indeed such services are 0% rated (or exempt?), as:

1. The orderer's place of business is in a non-member state, and;

2. Section 13.5.6, "What are services of lawyers and accountants?" seems to describe most accurately the services provided in this case:
"legal and accountancy services in the general administration or winding up of a deceased’s estate
even if that estate includes land or property. Such supplies are not made to beneficiaries but to the
estate. This is seen as whoever is appointed executor or administrator, although they may also be a
beneficiary
;"

Best regards,
YH
YH
 
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Re: VAT on legal services for non Eu resident

Postby SeanJames on Sat Feb 28, 2009 6:57 pm

YH,

YH wrote:It seems that indeed such services are 0% rated (or exempt?),


Ha ha. As a technicality, it's neither (although 0% would be most accurate to describe). The supply is outside the scope of UK VAT (as the supply is deemed to take place in your customers country), its basically the same as it being zero-rated as any VAT that you incurred in relation to performing this work can be treated as input tax (i.e. you can recover it) subject to normal conditions and you have no restrictions on recovering VAT.

I'm a bit of a stickler for terminology, and where you're not wrong in saying zero-rate, I'd steer clear of using the term exempt as it throws up all sorts of confusion.

Cheers
Sean
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Re: VAT on legal services for non Eu resident

Postby dally on Sun Mar 01, 2009 9:23 pm

Possibly aka exempt with credit in the European context?
dally
 
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Re: VAT on legal services for non Eu resident

Postby YH on Sun Mar 01, 2009 10:38 pm

Cheers sean!

Your being a "stickler" for terminology is an asset. The question is what does the solicitor have to fill in under the "VAT @" in his invoice? Leave it blank or write 0%? I'd say 0% - and then he can reclaim the VAT on his outgoings.

Though i'm not a UK resident, the rationale of VAT is similar, if not identical, wherever applied. In my country (Israel), 0% would be the rate.

regards
YH
 
Posts: 3
Joined: Fri Feb 27, 2009 6:55 pm

Re: VAT on legal services for non Eu resident

Postby SeanJames on Sun Mar 01, 2009 11:06 pm

I'd put VAT at 0% as it removes any questions.

In the EC zero-rate is general referred to as "exempt" but the UK has to be different :D

So, on your invoice put, VAT @ 0%

Cheers
Sean
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