VAT when acting as an Agent

[Healey16]

Hi All,

I am unclear on a particular area concerning VAT and acting as an agent.

From my understanding you are only liable on VAT on your commission amount and not the monies due to the principal. If the principal is EU based or non-EU would these be then treated as usual zero rated? Would you also be liable to pay VAT in the country the principal is based or just the country that you are operating from (ie. the UK)?

Would there be any situation when acting as an agent that you would become liable for VAT in the principals country?

Thanks in advance.

[les35]

It depends! There are a number of possible outcomes:
- what is the underlying supply?
- is the supply one of goods or services? If service, does it fall within a General Rule?
- are any or all parties in a single Member State?
- is the Agency arrangement in a written document?


Usually of course the value of the Agents' supply is only his commission. But some situations mean that he has to account for VAT on the value of the whole supply (hence the questions above).

[Healey16]

Hi Les35 - thanks for the reply!

The underlying supply is hire of vehicles (short term). We will have a written agreement which will state we are acting as agent.

I would see this as a service and as we are UK registered (based in UK offices as well) the supply would be UK. However when looking at the general rule it states short term car hire supply would be classed as where the vehicle is handed over.

Hopefully this will help with my query!

[les35]

Assuming your customer is another business, then the supply is subject to the General Rule. At least you won't have to register in another Member State. But you will have to complete an EC Sales List.
I suggest a meeting with your Accountant (or VAT Specialist) to go over the contract to confirm the above; and to ensure your invoices are properly worded, as B2B supplies need specific wording.