Guidance

Work out your place of supply of services for VAT rules

Find out which country’s VAT rules to use when supplying services abroad.

What ‘place of supply’ means

The ‘place of supply’ is the place where you make a supply and where you may be charged and pay VAT.

With services, deciding the place of supply can be complicated. There are various rules that apply, depending on:

  • whether you’ve more than 1 business location
  • the kind of service you give
  • the place where your business or your business customer ‘belongs’

Which country’s VAT rules to use when charging VAT on services

If you’re in the UK and the place of supply of your service is in the UK, you charge and account for VAT according to UK VAT rules.

If you’re in the UK and the place of supply of your service is in another EU country, you do not pay UK VAT.

But for some supplies, you may need to register and account for VAT in the country of supply.

You must check with the tax authority in that country to find out how to treat the services you’re supplying. A list of EU VAT contacts can be found in Notice 725.

If the place of supply of your service is not in the EU, you do not have to charge EU VAT but you should include the sale in box 6 on your VAT Return.

Broadcasting, telecommunications and e-services

There are special arrangements for charging VAT on the international supply of electronic services.

The general rule and the place of belonging

For most supplies of services, the place of supply is decided by what’s known as the ‘general rule’. But some supplies are subject to special rules that will affect their place of supply.

The general rule for working out the place of supply of services, apart from those covered by special rules is if you supply services to a:

  • business customer, the place of supply is the place where the customer belongs
  • non-business customer, the place of supply is the place where the supplier belongs

UK place of supply

You belong in the UK if:

  • your business establishment (your head office or only office) is in the UK, and you have no fixed establishments (subsidiary offices or agencies) in other countries
  • your business establishment is in the UK and you have fixed establishments in other countries, but the UK office is the one mainly concerned with supplying services
  • your business establishment is not in the UK but you have a fixed establishment here which is the one where you supply services from
  • you do not have either a business or fixed establishment in the UK or elsewhere, but your business is a corporate body (for example, a limited company) which is registered in the UK
  • you do not have a business or a fixed establishment in the UK, or anywhere else, but the UK is your usual place of residence

A business can only have one business establishment, but can have several fixed establishments.

If you’ve more than one place of supply

If you have a business establishment in the UK and establishments in other countries, you must look at what each establishment does in terms of supplying services. If, for example, your company has its head office in the UK, but has a French subsidiary that supplies services to local businesses, then the French company belongs in France for VAT purposes. This is the case even if your head office belongs in the UK for supplies that it makes in the UK.

Special rules for the place of supply

In some cases, the place of supply is determined by what service is supplied, rather than where the supplier or the customer belongs.

Hiring out a means of transport

A means of transport is something that can be used for transporting passengers or goods, and includes:

  • road transport
  • caravans and trailers
  • motor cycles and bicycles
  • ships and yachts
  • aircraft
  • railway rolling stock

It does not include freight containers, static caravans or racing cars.

Working out the place of supply when you’re hiring out a means of transport depends upon the length of time that you hire out the vehicles.

Long term hires last either more than:

  • 90 days for boats and ships
  • 30 days for other vehicles, these come under the general rule

For short term hires the place of supply is where the vehicle is physically given to the customer.

These special rules only apply to the transport itself. The services of a driver, pilot, operator or crew come under the general rule.

Land and property services

If you’re supplying services relating to land and property, the place of supply is always where the land or property is located.

Land and property includes the land itself plus any buildings or other structures, (including installations such as oil production platforms). Machinery installed within a building is not considered to be land or property.

Land and property services include:

  • construction, refurbishment, conversion, repair, maintenance and demolition
  • professional services of estate agents, architects, surveyors and so on
  • property management and maintenance services

VAT Notice 708: buildings and construction has more about the VAT rules for land and property.

Events

The place of supply of admission to an event is where the event takes place, wherever the customer or supplier is located. These include such services as:

  • entertainment and cultural performances - including sports events
  • the right to attend exhibitions, conferences, meetings or seminars
  • ancillary services, such as payments for cloakrooms or similar facilities

If the customer is a non-business customer then most supplies relating to events are subject to VAT where they’re carried out. This includes all services connected to cultural, artistic, sporting, scientific and educational events, or entertainment.

Intermediaries

Intermediaries provide a service of arranging or facilitating the supply of goods or services. They’re often called brokers or agents, and their customer is the person or organisation who they supply their service to. This can be the supplier or the buyer of the goods or services, or both.

If you’re an intermediary, then the place of supply of your services depends on whether your customer is in business.

The rule for working out the place of supply of intermediary services is if you supply intermediary services to a:

  • business customer, the place of supply is the place where the customer belongs
  • non-business customer, the place of supply is the same as the place of supply of the service you’re arranging

Work carried out on goods

Special rules apply for work carried out on goods.

Goods in this context means movable items, not fixed installations. Work includes any kind of physical service, including valuation, processing, manufacturing, repairs and maintenance, and alterations or finishing.

The rule for working out the place of supply of work carried out on goods is if you supply services to a:

  • business customer, the place of supply is the place is where the customer belongs
  • non-business customer, the place of supply is where you physically perform the work

Transport

For passenger transport the place of supply is where the transport takes place. If it takes place outside the UK, then it falls outside UK VAT rules.

For freight transport the place of supply varies according to whether the customer is in business.

The rule for working out the place of supply of freight transport is if you supply services to a:

  • business customer, the place of supply is the place where the customer belongs
  • non-business customer, the place of supply is where the transport takes place

VAT Notice 744B: freight transport and associated services has more about the VAT rules for freight transport services.

Services you supply outside the EC

If you’re supplying services to non-business customers outside the EC, you may not need to pay UK VAT.

These are mainly intangible services that include advertising, intellectual property rights, legal services and accountancy.

Registering for VAT under special rules for place of supply

If you belong in the UK and your customer is in another EU country, you may need to register in that country. You will need to contact the foreign tax authority in that country for advice.

Published 1 July 2014