A number of client have asked about the VAT treatment of invoices received from companies based within the EU for services which have been provided where the reverse charge rule was applied and were under the impression that this should no longer be the case post Brexit.

Where a UK company supplies services to a customer in the EU, whether this is a business to business or business to consumer supply, and it falls under the general rule for the place of supply of services, it will now be treated as outside the scope of UK VAT.  The supply will be a reverse charge supply.  The amount of the sale will still be included in box 6 of the VAT return.

The receipt of such supplies from the EU will be treated the same way as non-EU supplies and subject to the reverse charge rule.  This time, the equivalent VAT amount will be added to box 1, declaring the output tax, and the same amount added to box 4, reclaiming the same amount as input tax.  The net effect results in no additional VAT being paid or reclaimed.

Digital services supplied to businesses will also be treated this way.

Digital services supplied to consumers however are treated differently.

Posted 22 October 2021