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bigduckontax
bigduckontax, Accountant
Category: Tax
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I'm Melissa, I have already asked a similar question.

Customer Question

Hello I'm Melissa, I have already asked a similar question. But I wanted to be sure if I had to apply 20% VAT rate to EU businesses
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Melissa, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. When undertaking EU business there are two things to remember regarding VAT. If you have the VAT or equivalent number of your EU customer then the Reverse Charge System applies. Under this System you credit VAT on the transaction as output tax, similtaneously debiting the VAT as an input thus effectively making the transaction zero rated. You will have to complete an EU Sales List which HMRC will send you at intervals to support your position. If you do not have the VAT number of your customer then you charge VAT at the standard rate on your invoice and account for it in the usual quarterly return. I do hope that my answer has shed some light on this matter.
Customer: replied 1 year ago.

Hi Keith,

So I mention something on the invoice like zero rate VAT under a regulation.

Regards

Expert:  bigduckontax replied 1 year ago.

Melissa

If you are using the Reverse Charge (RC) you do not charge VAT on the supply, specifying on its invoice that the RC applies. You account for a notional receipt of VAT at the standard rate as an output and the recover the tax immediately on settlement as an input. You also quote the the other party's VAT Number or equivalent on the invoice.

Otherwise, it's just VAT as usual.

Outside the EU, of course, and that includes Switzerland, the Isle of Man and the Channel Islands, it is an export, a zero rated supply where you still charge VAT, but at a rate of 0%.

Don't blame me, I didn't invent this idiotic system: I've only been accounting for it since it's introduction in the early 70s!

Regards

Keith

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