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So I sell a simple SaaS service and asked my accountant one question. Do I charge VAT. Here is his reply: " Vat rules You need to identify B2B and B2C UK, EC
by mrkmcknz 14y ago
So I sell a simple SaaS service and asked my accountant one question.
Do I charge VAT. Here is his reply:
"
Vat rules
You need to identify B2B and B2C UK, EC and outside EC customers.
A vat registration number is usually accepted as evidence of B2B.
1 All sales outside the EC have no vat implications and are ‘outside the scope of vat’.
2 All sales to UK customers (B2B and B2C) have UK vat to apply to them and are standard rated.
3 All B2B sales to EC customers have no vat and are ‘outside the scope of UK vat’.
4 All B2C sales to EC customers have UK vat to apply to them and are standard rated.
There is a further twist.
If you can identify where your service is effectively used/enjoyed, then
If the place of supply would be the UK (2&4) but the service is enjoyed outside the EC, then no vat (outside the scope)
or
If the place of supply would be outside EC (1) but the service is enjoyed in the UK, then UK vat applies."
- mootothemax 14y agoAll B2B sales to EC customers have no vat and are ‘outside the scope of UK vat’. Interesting. I was under the impression that EC B2B sales were zero-rated only for companies that are VAT-registered. This is why we grab and validate a VAT number for each EC company that we issue an invoice for. That said, God only knows how this might tie into the living hell which is Polish bureaucracy.
- Strom 14y agoI'm quite sure it's exactly as you mentioned - the B2B payer needs to be VAT-registered. That's how it works in Estonia, anyway.
- theallan 14y agoYou need to be able to prove that the purchase is B2B rather than B2C, and the easiest way of doing that is to get the buyer's VAT number. You could still do B2B without a VAT number, but you need to be able to prove that the buyer was a business if the tax man asks about it.
- mootothemax 14y agoAh, ok, thanks, that makes sense :) (well - "sense" is relative when it comes to all these VAT rules...)
- kakoni 14y agoSome more twists; - If you do distance selling(=mail order, ecommerce) from UK and lets say you've got lots of Finnish customers 1. B2C to Finns using UK vat up till 35000 euros of sales 2. Once you pass that 35ke distance selling threshold you need to register for VAT in Finland and start applying Finnish VAT to your goods. (http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/distance_selling/index_en.htm http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_wo...)