VAT on Services provided for non EU company

[missile]

Hi,

I started a limited company to verify the quality of goods manufacturered in the UK for export and use in Australia. My contract is with an Australian Company.

My total invoices for the first year trading are less than VAT registration threshold. It seems likely that earnings shall exceed £73,000 this year so I am required to register for VAT.

I have been told that as the service is carried out for and on behalf of a non EU company on goods designated for export, I should not charge VAT but I am able to reclaim VAT on goods purchased to carry out this service.

I would appreciate your advice and comments

[Generix]

Yes, I would agree your services fall within the basic B2B rule (art 44 of EU VAT directive) and therefore the tax point for the service is 'where the customer is established' (this naturally assumes your customer is in business - or more technically carrying out an economic activity);

Therefore you have an option to register for VAT. Although you don't HAVE to (for these supplies in isolation at least).

If you opt to register for VAT you may recover VAT on your purchases subject to the normal rules (i.e. that they are used to make taxable supplies etc). If you opt not to register for VAT you will not be able to recover your VAT.

Hope this is clear.

[Generix]

Hi,

I started a limited company to verify the quality of goods manufacturered in the UK for export and use in Australia. My contract is with an Australian Company.

My total invoices for the first year trading are less than VAT registration threshold. It seems likely that earnings shall exceed £73,000 this year so I am required to register for VAT.

I have been told that as the service is carried out for and on behalf of a non EU company on goods designated for export, I should not charge VAT but I am able to reclaim VAT on goods purchased to carry out this service.

I would appreciate your advice and comments

By the way, it's not specifically that you are doing stuff on goods destined for export that there is no VAT chargeable...that is a bit of a red herring whoever told you that. It's just that your services do not fall under any of the exceptions to the basic rule for the place of supply; therefore basic rule applies - supplied where customer belongs.