EU services - easy if you know!

[xanadan]

So we are a new company (no sales, first products due to be produced end of July).

We have had two consultants working in Germany exploring the potential of the German marketplace for our product.

One is registered for VAT, one is not. Both have invoiced the company net.

How do I represent this in the VAT return? Getting confused with the guidance I can find!

[Haysden]

You effectively have to account for UK VAT on behalf of your suppliers. It's not relevant that one of them isn't VAT registered. On your VAT return pay over the 20% VAT that you calculate on their invoiced value in box 1, and record the net value in box 6. Then, claim the VAT back in box 4 to the same extent you can claim input VAT normally and record the same net value in box 7. So the net effect is nil, making the whole thing look pointless, but there very good legal reasons why this has to be done. If your business is going to be making partly exempt supplies you won't be able to reclaim the VAT in full.

[xanadan]

Thanks very much!

[Generix]

You might want to give us a shout again when you start selling product if you intend to sell to other EU territories.