This guidance note deals with the VAT treatment of services that come within the scope of the reverse charge mechanism within the EU. It should be noted that since January 2010 most services are now treated as reverse charge or ‘general rule’ services if they are supplied to relevant business customers located in another EU member state. However, there are exceptions to this general rule and the exceptions are covered in a number of different guidance notes linked to this document. This guidance note should be read in conjunction with the Overview of the place of supply of services rules guidance note. VATREVCHG1000; VATA 1994, s 8; VATPOSS06000; De Voil V7.269 (subscription sensitive); 2006/112/EC, Articles 43–59; 2011/282/EU; De Voil V3.182 (subscription sensitive); VAT (Place of Supply of Services) (Amendment) Order, SI 1995/3038 (subscription sensitive); De Voil V3.183 (subscription sensitive); VAT Notice 741A: place of supply of services
See ‘VAT focus: VAT case study: International services: B2B & reverse charge’ by Aidan Lyons in Tax Journal, Issue 1043, 19 (6 September 2010) (subscription sensitive).
There are exceptions to the general rule and more information can be found below.
Determining the type of service provided
The supplier needs to determine the type of service provided in order to be able to ascertain the correct VAT treatment of the service provided. If the supply is made up of a number of different types of services, the supplier will need to determine whether there is a single supply or a number of separate supplies made to the customer. Please see the Single or multiple supplies – application of Card Protection Plan guidance note for more information on how to determine whether the supplier is making a single composite supply or a mixed supply for VAT purposes.
Once the supplier has accurately determined the type of services that will be provided to the customer, the supplier will need to ascertain the location and business status of the customer. The Flowchart – Place of supply of services can assist with determining the type of supply made and the associated VAT treatment.