VAT: New rules for cross border services from 1 January 2010 - Mazars - United Kingdom
VAT: New rules for cross border services from 1 January 2010
A new EU directive has been adopted which will mean that from 1 January 2010, there will be new VAT rules relating to the supply of services across the EU. Instead of the current basic rule that the place of supply of services is treated as being where the supplier is established, the place of supply for most services will shift to the country where the customer is established.
These changes will affect businesses involved in cross border supplies of services, either as a supplier or as a recipient of the services. UK business customers receiving cross border services after 1 January 2010 will become liable to account for UK VAT on most services provided by their overseas suppliers under what is known as the ‘reverse charge’ provisions. This means that the recipient will need to charge itself VAT on the value of services received. The supplier will no longer charge foreign VAT. This will have a further impact on businesses that are not able to fully recover VAT. UK businesses that supply services to customers where the place of supply is the customer’s country, will need to obtain the customers VAT registration number and will have quarterly reporting obligations. It is essential that affected businesses have systems in place before the commencement of the new rules to ensure they are able to comply with these additional requirements and to avoid penalties.
Our VAT specialists can help businesses meet these new obligations and assist them in implementing the new rules in the most VAT efficient manner.
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Peter Tansey-Dwyer
Assistant Manager, Indirect Tax
+44 (0)1908 680 775
Jacki Wells
VAT Director
+44 (0)161 209 5063
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