Guidance

Place of supply of services (VAT Notice 741A)

This notice explains how to determine the place of supply of your services and how to deal with supplies of services which you receive from outside the UK.

Detail

This notice cancels and replaces Notice 741 (February 2010). Details of the changes to the previous version can be found in paragraph 1.3 of this notice.

1. Overview

1.1 Who should read this notice

You should read this notice if you:

  • make supplies of services to customers outside the UK
  • receive services from suppliers that belong outside the UK
  • belong outside the UK and have customers in the UK

1.2 What this notice is about

This notice explains how to determine the place of supply of your services and therefore where the services are liable to VAT. Once you’ve made this decision you can move onto considering the VAT liability of the supply. It also explains how to deal with supplies of services which you receive from outside the UK.

1.3 What’s changed

The notice has been substantially updated throughout to reflect changes in the law.

1.4 The law this notice covers

UK VAT law covered by this notice is contained in the VAT Act 1994, as amended, as follows:

  • section 7A of the VAT Act covers the general rule for business to business (B2B) and business to consumer (B2C) supplies of services and also defines a ‘relevant business person’ for supplies of services - see section 6
  • section 8 covers the accounting mechanism for supplies received from outside the EU - the ‘reverse charge’ procedure - see section 5
  • section 9 covers where a person is regarded as belonging for VAT purposes - see section 3
  • schedule 3B covers the special scheme for non-EU suppliers of digital services within the non-Union VAT Mini One Stop Shop (VAT MOSS) scheme in section 15
  • schedule 3BA covers the Union VAT MOSS scheme for suppliers of digital services - see section 15
  • schedule 4A covers the rules for specific types of services - see the table in paragraph 6.4
  • schedule 6 paragraph 8 covers the valuation of services within the reverse charge procedure - see section 5
  • schedule 8 group 7 covers the zero rating provisions for international services - see section 17

EU VAT law covering this notice is contained in Council Directive 2006/112/EC (Principal VAT Directive) and Council Implementing Regulation (EC) No 282/2011 as amended, which directly applies in the UK.

1.5 VAT liability

With the exception of section 16, which covers the zero rating of certain intermediary services, work on goods for export and training for overseas governments, this notice does not cover rates of VAT. There is no general relief for the export of services as there is for goods. Services supplied in the UK may be exempt, zero-rated, standard-rated or liable to VAT at a reduced rate. For information on the VAT liability of supplies see section 29 of VAT guide (Notice 700).

1.6 How to use this notice

This notice assumes you have a knowledge of the principles of VAT explained in VAT guide (Notice 700).

It covers place of supply and related aspects.

It’s unlikely that all the information in this notice will apply to you, so you do not need to read it all from beginning to end. You should take care to read the relevant sections in full and remember that lists of examples are not exhaustive.

2. Background to place of supply of services

2.1 The place of supply

For EU VAT purposes, the place of supply of a service is the place where that service is treated as being supplied. This is the place where it’s liable to VAT (if any). There are a number of place of supply rules for working out where services of different kinds are supplied, for example where the place of supply of services is:

  • in a member state of the EU, that supply is subject to the VAT rules of that member state and not those of any other country - if the member state is not the UK, such supplies are said to be ‘outside the scope’ of UK VAT
  • outside the EU, that supply is made outside the EU and is therefore not liable to VAT in any member state (although local taxes may apply), such supplies are said to be ‘outside the scope’ of both UK and EU VAT

2.2 The impact on UK suppliers

If you belong in the UK and the place of supply of your services is the UK, you must charge any UK VAT due and account for it to HMRC regardless of where your customer belongs. If the place of supply of your services is another member state, you or your customer may be liable to account for any VAT due to the tax authorities of that country, see paragraph 2.9.

Where the place of supply of your services is outside the UK, you should ensure that your records contain sufficient factual evidence that this is the case.

If the place of supply of your services is outside the EU you should not charge UK VAT but, as you may need to account for the local tax, you’ll need to consider the tax rules of the country into which you are making your supply.

2.3 Why its important to identify what is being supplied

It is essential that you think carefully about the nature of any services that you supply or receive because it will determine which place of supply rule applies.

You should ask yourself ‘what am I supplying?’ or ‘what am I receiving?’. The invoices should avoid general or generic descriptions and make clear the nature of the services involved.

2.4 Why its important to establish who is being supplied

There are different rules depending on whether you’re supplying services to consumers B2C or business B2B.

B2C supplies means supplies to a:

  • private individual
  • charity, government department or other body which has no business activities
  • ‘person’ (natural or legal) who receives a supply of services wholly for a private purpose

B2B supplies means supplies made to businesses. It also includes supplies to customers that have both business and non-business activities such as charities, local authorities and government departments. Unless you have information that suggests the service is wholly for private use, you may presume that your customer is in business if they provide you with their VAT number.

2.5 UK territorial limits and the VAT territory of the EU

The UK consists of Great Britain, Northern Ireland and the waters within 12 nautical miles of their coastlines. The Isle of Man is treated as part of the UK for VAT purposes and VAT is chargeable in the Isle of Man (under Manx Law which generally parallels UK legislation). There is no VAT in the Channel Islands or Gibraltar, which are outside the UK and EU for VAT purposes.

The VAT territory of the EU is important in establishing where particular types of service are supplied. Details of the EU VAT territory are available at VAT: EU country codes, VAT numbers and VAT in other languages.

2.6 As a non-UK business, you could be liable to register for VAT in the UK

If you supply services whose place of supply is in the UK, you may be liable to register for VAT in the UK. From 1 December 2012 if you are not established in the UK, there is no registration threshold for taxable supplies of services.

This means that if you make any supplies of services taxable in the UK, to which the reverse charge (see section 5) does not apply, you must register for VAT here (unless you are eligible to use a special accounting scheme such as the MOSS) - see section 15), and account for any UK VAT to HMRC. If you only make supplies of services in the UK to which the reverse charge does apply you are not entitled to register for VAT in the UK. For information about registration see Notice 700/1: should I be registered for VAT?.

2.7 Recovery of input tax

If you supply services, you may recover (subject to the normal rules) input tax related to:

  • taxable supplies
  • supplies made outside the UK which would be taxable if they were made in the UK
  • supplies of certain insurance, financial, and other exempt services made to a person outside the UK (‘specified supplies’), see VAT Notice 706: partial exemption

2.8 Recovery of VAT incurred in other member states

A business that incurs VAT in a member state different to where they are based may be able to claim a refund of that VAT. See Claim back VAT paid in the EU if you’re established elsewhere (Notice 723A).

2.9 As a UK business, you could be liable to register for VAT in other member states

If you supply services whose place of supply is in another member state, you may be liable to register for VAT in that country, but only if the ‘reverse charge’ does not apply (see section 5) or you choose not to use any available special scheme such as MOSS.

If you do not have an establishment in that member state, you may need to appoint a local tax representative to account for VAT there on your behalf.

Details of contact addresses and other useful information provided by the VAT authorities in other member states can be found at European Commission.

3. Place of belonging

3.1 Introduction

The place where a supplier or customer belongs will determine where the service is supplied and who accounts for any VAT due in the following cases:

  • B2B general rule services: supplied where the customer belongs (see paragraph 6.3)
  • B2C general rule services: supplied where the supplier belongs (see paragraph 6.2)
  • specific B2C services are also supplied where the customer belongs (see section 12)

3.2 Belonging in the UK

You belong in the UK for the purposes of either making or receiving a supply of services when you have any of the following:

  • a business establishment in the UK and no fixed establishment elsewhere that’s more closely connected with the supply
  • a business establishment outside the UK and a fixed establishment in the UK that’s most directly connected with the supply
  • no business or fixed establishment anywhere, but your usual place of residence is the UK

The references to a ‘business establishment’ or a ‘fixed establishment’ should also be read as including a legal person with no business activities for deciding where such a customer belongs.

3.3 Business establishment

The business establishment is the place where you have established your business and the main functions of the business’ central administration are carried out. This will usually be the head office, headquarters or ‘seat’ from which the business is run. This is where essential day-to-day decisions concerning the general management of the business are taken. A registered office alone is not sufficient to create a business establishment.

3.4 Fixed establishments

A fixed establishment is an establishment other than the business establishment, which has the human and technical resources necessary for providing or receiving services permanently present. A business may have several fixed establishments, which may include a branch or agency. If you have a temporary presence of human and technical resources in the UK, this does not create a fixed establishment in the UK.

Where you have establishments in more than one country, you’ll need to decide which one is most directly concerned with a supply (see section 4).

3.5 Examples of what is a fixed establishment

Examples of a fixed establishment include:

  • an overseas business that sets up a branch comprising staff and offices in the UK to provide services - the UK branch is a fixed establishment
  • a company with a business establishment overseas that owns a property in the UK which it leases to tenants - the property does not in itself create a fixed establishment, but, if the company has UK offices and staff or appoints a UK agent or representative (such as a subsidiary company acting on their instructions) to carry on its business, this creates a fixed establishment in the UK
  • an overseas business has contracts with UK customers to provide services; it has no human or technical resources in the UK and therefore sets up a UK subsidiary to act in its name to provide those services - the overseas business has a fixed establishment in the UK created by the agency of the subsidiary
  • a UK company that acts as the operating member of a consortium for offshore exploitation of oil or gas using a fixed production platform - the rig is a fixed establishment of the operating member

Examples where there is not a fixed establishment include:

  • an overseas company that registers or is incorporated at its accountant’s address but has no other offices or staff in the accountant’s country
  • an overseas television company that sends staff and camera equipment to the UK for a week to shoot a documentary before returning home
  • a team of builders and contractors that are temporarily in the UK in order to carry out a one-off construction project
  • the presence of computer servers alone within a country
  • the existence of a UK VAT registration without any supporting resources in the UK

3.6 Usual place of residence

Individuals receiving supplies in a private capacity are treated as belonging in the country where they have their usual place of residence. An individual has only one usual place of residence at any point in time. They are normally regarded as resident in the country where they’ve set up home with their family and are in full-time employment. A person is not resident in a country where they’re only visiting as a tourist.

3.7 Examples of usual place of residence

Examples:

  • a person who lives in the UK, but commutes to Ireland daily for work, belongs in the UK
  • overseas forces personnel on a tour of duty in the UK live in rented accommodation with their families and have homes overseas to which they periodically return to on leave - they belong in the UK throughout their tour of duty

3.8 Usual place of residence of a person with no right to remain in the UK

For VAT purposes, persons who have not been granted a right or permission to remain in the UK should be treated as belonging in their country of origin. This will apply to, for example, asylum seekers and those entering the UK without permission.

In these circumstances, the country in which individuals have their usual or permanent place of residence is their country of origin until they are granted the right to remain in the UK.

Once an individual has been granted leave or permission to remain in the UK, they belong in the UK, even if they overstay.

4. Establishment most closely concerned with the supply

4.1 Deciding which establishment is the most closely concerned

If, as either the supplier or the recipient of services, you have establishments in more than one country, it is essential to determine which of those places is treated as making or receiving the supply in question.

It is generally the case that the business establishment will be the most closely concerned with the supply. But, if the supply is made using the human and technical resource of a fixed establishment, or the supply is received for the needs of the fixed establishment rather than the business as a whole, then this will be the place most closely concerned with the supply.

Where a branch of a company contracts and pays for purchases that are to be used by the whole business, the supply will be seen as being made to the business establishment, not the branch. This will be the case even where the branch creates an internal charge to the business and other fixed establishments.

4.2 Examples of the place of belonging where a business has more than one establishment

A company whose business establishment is in France contracts with a UK bank to supply French speaking staff for the bank’s international desk in London. The French company also has a fixed establishment in the UK created by a branch. The French establishment deals directly with the UK bank without any involvement of the UK branch. The staff are supplied by the French establishment.

A company which has its business establishment overseas contracts with private individuals in the UK to provide information. The services are provided and invoiced by its UK branch. Customers’ day to day contact is with the UK branch and they pay the UK branch. The services are supplied from the UK branch which is a fixed establishment.

A UK supplier contracts to supply advertising services. Its customer has its business establishment in Austria and a branch in the UK which is a fixed establishment. Although day-to-day contact on routine administrative matters is between the supplier and the UK branch, it’s the Austrian establishment’s services that are being advertised. The supplies are received at the overseas establishment.

A customer has a business establishment in the UK and fixed establishments in a number of other countries. The customer contracts to buy telecoms services through its Swiss branch, making all payments from there. But the telecoms services are used by the customer at all of its branches throughout the EU. The establishment most closely connected to the supply will be the business establishment in the UK. This is because the services are not for the needs of a specific branch.

A business is incorporated in the UK but its sole director lives in Germany. It does not have a permanent physical presence at the registered address and the day-to-day business is undertaken from the home address of the director. The establishment most closely connected with the supply is the business establishment in Germany.

4.3 Factors which may help you decide at which establishment your customer receives your supplies

Deciding factors are:

  • obvious use of your services at a particular establishment (for example, the lease of equipment for use at that establishment)
  • taking your instructions from a particular establishment
  • the service relating to business being conducted by your customer in an establishment in a particular country (such as written reports or accounts)
  • making any supplies of goods or services to a particular establishment

But, it is always necessary to consider all the facts.

If you’re a supplier it is your responsibility to find out at which establishment your customer receives your supplies and therefore whether or not UK VAT is chargeable. If you have established the facts about your customer but are still unsure about where your services are received, you should contact our VAT: general enquiries team for guidance.

5. Reverse charge

5.1 Introduction

The reverse charge is a simplification measure to avoid the need for suppliers to register in the member state where they supply their services. If you’re a UK supplier providing services in another member state you should check with your customer and that member state how their rules work. If you’re a UK recipient of services from a non-UK supplier the following rules apply to you.

The reverse charge applies where:

  • the place of supply is the UK
  • the supplier belongs outside the UK
  • you belong in the UK
  • the supply is not exempt (this includes exempt supplies subject to an option to tax)
  • for supplies not within the general rule, you’re VAT registered in the UK

The reverse charge applies to almost all B2B supplies of services except exempt supplies. It does not apply to land on which the option to tax has been exercised (see section 7 for more details). In this circumstance the non-UK supplier must register and account for VAT in the UK.

The reverse charge is not a complicated accounting procedure. Where it applies to services which you receive, you, the customer, must act as if you are both the supplier and the recipient of the services. It applies if your supplier belongs outside the UK even if they have a UK VAT registration number.

5.2 How the reverse charge works

You simply credit your VAT account with an amount of output tax, calculated on the full value of the supply you’ve received, and at the same time debit your VAT account with the input tax to which you are entitled, in accordance with the normal rules. The partial exemption implications for reverse charge services are explained in Notice 706: partial exemption.

You then include in the relevant boxes of your VAT Return the:

  • amount of output tax in box 1 (VAT due on sales)
  • amount of input tax in box 4 (VAT reclaimed on purchases)
  • full value of the supply in box 6 (total value of sales)
  • full value of the supply in box 7 (total value of purchases)

5.3 The scope of the reverse charge

The reverse charge does not apply to supplies of services where both the supplier and the customer belong in the UK. It only applies where services are supplied in the UK by a supplier belonging overseas. Services which, under the place of supply rules, are supplied in another country are outside the scope of UK VAT. Such services can only be subject to tax in that country.

5.4 The effect of the reverse charge

If you can attribute the input tax due under the reverse charge to your taxable supplies (and so can reclaim it in full) then the reverse charge has no net cost to you. If you cannot attribute the input tax due (because, for example, you make exempt supplies) the effect is to make you pay VAT on the supply at the UK rate. This puts you in the same position as if you had received the supply from a UK supplier rather than from one outside the UK.

5.5 If I receive exempt supplies

The reverse charge does not apply to exempt services. It only applies to taxable supplies, either at the standard, reduced, or zero rate see section 29 of VAT guide (Notice 700).

5.6 B2B general rule services

If you belong in the UK and receive supplies of any B2B general rule services (see section 6) and your supplier belongs outside the UK, the reverse charge applies (unless specific ‘use and enjoyment’ provisions apply - see section 13).

For example a UK business receives:

  • customised software on a disc from a USA business (B2B general rule service) - the place of supply is the UK and the UK business must account for VAT under the reverse charge
  • a supply of legal services from a French business (B2B general rule service) - the place of supply is the UK and the UK business must account for VAT under the reverse charge
  • telecommunication services from a USA supplier and consumes those services in the USA - although normally taxable in the UK under the B2B general rule, specific use and enjoyment rules apply (see section 13)

5.7 The effect on customers who are not registered for VAT

If you belong in the UK but are not already UK VAT registered and you receive supplies of B2B general rule services from overseas suppliers (that are treated as supplied where the recipient belongs), the value of those supplies must be added to the value of your own taxable supplies when determining whether you should be registered for UK VAT. Even if you make no taxable supplies yourself you may still be required to register if the value of general rule services received from overseas suppliers exceeds the registration thresholds.

5.8 The interaction with VAT group treatment

Where B2B general rule services (except exempt services and land on which the option to tax has been exercised) are purchased by an overseas member of a UK VAT group and provided to a UK member of that VAT group, its representative member is required to account for any UK VAT due under the intra-group reverse charge. See VAT Notice 700/2: group and divisional registration.

See also paragraph 5.14 for a possible interaction with VAT grouping and other member states.

5.9 The scope of the reverse charge on specified B2B services that are supplied in the UK

The reverse charge also applies if you are UK VAT registered, belong in the UK and receive B2B supplies of the services listed below which are supplied in the UK by a supplier who belongs outside the UK.

The services to which this applies are:

  • services relating to land and property (except opted supplies of land) (see section 7)
  • restaurant and catering services, admission to an event and work on goods (see section 9)
  • passenger transport (see section 10)
  • services that are treated as supplied in the UK as a result of the use and enjoyment provisions (see section 13)

You should give your UK VAT registration number and confirm you belong in the UK to your supplier as evidence that they’re not liable to account for any UK VAT due.

5.10 The effect on customers who are not registered for VAT

If you are not UK VAT registered and receive the services in paragraph 5.9 supplied in the UK the reverse charge does not apply. Unlike the general rule services, such supplies do not count as your taxable supplies for the purposes of determining whether you’re liable to be registered as a taxable person as described in paragraph 5.7. Your supplier is liable to account for any UK VAT due.

5.11 The position for non-UK suppliers of specified supplies whose customer does not provide a UK VAT registration number

If you’re a non-UK supplier of the services in paragraph 5.9 and your customer does not provide a UK VAT registration number or does not satisfy you that they belong in the UK, you are responsible for accounting for any UK VAT due on your supply. If you are not already registered in the UK, you may be liable to register. For information about registration see Notice 700/1: should I be registered for VAT?.

5.12 How to value a reverse charge supply

The amount payable to your overseas supplier for the services excludes UK VAT. The value of the transaction on which VAT must be added under the reverse charge is the total amount paid together with the value of any other form of consideration. This includes any taxes levied abroad. See VAT guide (Notice 700) if you need to convert foreign currency into sterling.

5.13 About the time of supply

For information about the time of supply see VAT guide (Notice 700).

5.14 Intra-company supplies

Where an overseas establishment supplies services to a UK establishment within the same legal entity, the reverse charge does not apply since this is a transaction within a single entity and so not a supply for VAT purposes.

But, if the overseas establishment is part of a VAT group in another member state, such a charge can arise (either in the UK or the other member state), if that member state’s VAT grouping rules include only the local establishment in their VAT group, and not the UK establishment. UK VAT grouping on its own does not cause this to happen. More guidance on this issue can be found at Revenue and Customs Brief 18 (2015): VAT grouping rules and the Skandia judgement.

5.15 UK VAT incurred by non-UK suppliers

Suppliers who belong outside the UK and whose customers account for UK VAT by means of the reverse charge or through MOSS, may be able to reclaim VAT incurred on UK costs. See Claim back VAT paid in the EU if you’re established elsewhere (Notice 723A).

5.16 UK VAT charged in error to a customer that does not belong in the UK

Where VAT is charged in error by a UK supplier, the error should be corrected by the supplier and not claimed through the refund mechanisms or UK VAT Return of a non-established taxable person.

5.17 What to do if I make supplies subject to the reverse charge in my customer’s member state

You’ll need to indicate on your invoice that the supply is subject to the reverse charge and you’ll need to complete an entry on an EC Sales List with the value of the sales made and your customer’s registration number. More details are available at VAT: how to report your EU sales.

5.18 What to do if my supplier has a UK VAT number and raises a VAT invoice

If you receive a supply to which the reverse charge applies and yet your non-UK supplier issues a VAT invoice on a UK VAT registration, you must still apply the reverse charge as it is not an optional adjustment. You should advise your supplier to amend or correct their invoice appropriately.

6. The place of supply rules for services

6.1 Introduction

The place of supply rules contain default or ‘general’ rules, one for supplies to business customers B2B and one for supplies to consumers B2C. There are a number of exceptions to the general rules and there are special rules to cover these.

In order to determine the place of supply of your service you should consider the exact nature of your services against each of the special rules first (see paragraph 6.4) and only if none apply will your service fall under a general rule. Once you have determined which rule applies you should refer to section 16 to determine whether your supply is subject to the zero rate.

6.2 B2C supplies

The general rule for B2C supplies of services is that the place of supply is where the supplier belongs, irrespective of the location of their customer.

6.3 B2B supplies

The B2B general rule for supplies of services is that the supply is made where the customer belongs.

Where the B2B rule applies you should obtain commercial evidence showing that your customer is in business and belongs outside the UK. VAT registration numbers are the best evidence that your EU customer is in business. If your customer is unable to provide a VAT number you can accept alternative evidence. This includes certificates from fiscal authorities or other commercial documents indicating the nature of the customer’s activities in their home country. Such evidence should be kept as part of your records.

Some customers may have non-business as well as business activities. Examples of such customers are government departments, local or municipal authorities and similar public bodies. In such circumstances, provided your customer can demonstrate that they have business activities (such as by providing a VAT number), the place of supply is determined by where the customer belongs.

Where a customer is unable to provide a VAT number, or other evidence to clearly demonstrate business activities, the supply should be treated as a B2C transaction.

If you are supplying services to a business customer that are being used for wholly private purposes, the B2C rules apply. To decide where a service is being used for private purposes, you should consider the nature of the services being provided. If in doubt, confirmation should be sought from the customer.

6.4 Special rules

There are special place of supply rules for certain services as follows.

Type of service For more information see
Land related section 7
Hire of means of transport section 8
Services, including admission, linked to physical performance (for example, artistic, cultural, education and training, sporting, entertainment services, exhibitions, conferences, meetings)

Ancillary transport services, valuation of and work on goods

Restaurant and catering services
section 9
Passenger and freight transport section 10
Intermediary services section 11
B2C supplies of certain services supplied to customers belonging outside the EU section 12
Use and enjoyment of:
- digital services
- the letting on hire of goods (including means of transport)
section 13
B2C supplies of digital services (from 1 Jan 2015) section 14

7. Land related services

7.1 Introduction

If you supply services that directly relate to land, the place of supply of those services is where the land itself is located, irrespective of where you or your customer belongs or whether they’re in business or not. What follows is a summary of the services covered by this provision. More detailed guidance has been published by the EU Commission in the form of an Explanatory Note.

7.2 What is meant by ‘land’

For the purpose of determining the place of supply, land means any:

  • specific part of the earth, on, above or below its surface, over which title or possession can be created
  • building or structure fixed to or in the ground above or below sea level which cannot be easily dismantled or moved
  • item making up part of a building or construction and without which it is incomplete (such as doors, windows, roofs, staircases and lifts)
  • item, equipment or machine permanently installed in a building or construction which cannot be moved without destroying or altering the building or construction

7.3 Services directly related to land

This rule applies only to services which relate directly to a specific site of land or buildings, that is those services derived from land and where the land is a central and essential part of the service or where the service is intended to legally or physically alter a property.

It does not apply if a supply of services has only an indirect connection with land, or if the land related service is only an incidental component of a more comprehensive supply of services.

For example, the services of an interior designer contracted to redesign the decor of a particular hotel would be land related. But, if the same supplier was contracted to create a corporate colour scheme or style for a hotel chain to use in their own properties, those design services would not be land related.

If a land related service is provided alongside other services that do not relate to land you will need to consider whether there are separate supplies or a single supply to which other services are ancillary. If there is a single supply directly related to land this treatment covers all the elements that make up the supply. If there are multiple supplies each will need to be considered on its own. See VAT guide (Notice 700) and section 8 for more guidance on single or multiple supplies.

If a service is provided to multiple specific sites in different countries it may still be directly related to land. Where this occurs and the service is land related, a suitable apportionment between countries should be made.

7.4 Examples of land related services

Examples of services that are land related include:

  • construction or demolition of a building or permanent structure (such as pipelines for gas, water or sewage)
  • surveying and assessing property
  • valuing property, including for insurance or loan purposes, even if carried out remotely
  • providing accommodation in hotels, holiday camps, camping sites or timeshare accommodation
  • maintenance, renovation and repair of a building (including work such as cleaning and decorating) or permanent structure
  • property management services carried out on behalf of the owner (but not the management of a property investment portfolio)
  • arranging the sale or lease of land or property
  • drawing up of plans for a building or part of a building designated for a particular site
  • services relating to the obtaining of planning consent for a specific site
  • on-site security services, even if provided remotely
  • agricultural work on land (including tillage, sowing, watering and fertilization)
  • installation and assembly of machines which, when installed, will form a fixture of the property that cannot be easily dismantled or moved
  • the granting of rights to use all or part of a property (such as fishing or hunting rights and access to airport lounges)
  • legal services such as conveyancing and drawing up of contracts of sale or leases, including title searches and other due diligence on a specific property
  • bridge or tunnel toll fees
  • the supply of space for the use of advertising bill boards - for example the leasing of a plot of land or the side of a building to allow a billboard to be erected
  • the supply of plant and equipment together with an operator, where the supplier has responsibility for the execution of the work to the land or property
  • the supply of specific stand space at an exhibition or fair without any related services

Examples of services that are not directly land related include:

  • drawing up of plans for a building or part of a building that do not relate to a particular site
  • arranging the supply of hotel accommodation or similar services
  • installation, assembly, repair or maintenance of machines or equipment which are not, and do not become, part of the building
  • management of a property investment portfolio
  • accountancy or tax advice, even when that relates to tax on rental income
  • the supply of storage of goods in property without a right to a specific area for the exclusive use of the customer
  • advertising services including those that involve the use of a billboard
  • marketing, photography and public relations
  • the supply of equipment with an operator, where it can be shown that the supplier has no responsibility for the performance of the work
  • general legal advice on contractual terms
  • legal services connected with fund raising for property acquisitions or in connection with the sale of shares in a company or units in a unit trust which owns land
  • stand space at an exhibition or conference when supplied as part of a package with related services that enable the exhibitor to promote their goods or services (for example design, security, power, telecommunications, and so on)

7.6 UK customers receiving services relating to UK land and non-UK suppliers providing services relating to UK land

If you belong in the UK and are a UK VAT-registered recipient of a service directly related to land (see paragraph 7.3 and paragraph 7.4) you are required to account for the reverse charge if your supplier belongs outside the UK (see section 5), even if they have a UK VAT registration. If there is any doubt in your mind you should confirm the position with your supplier.

If you are a supplier who does not belong in the UK, and your customer is not registered for UK VAT or does not belong in the UK, you are responsible for accounting for any UK VAT due on your supply. If you are not already registered in the UK, you’ll be liable to register and account for any VAT due.

If you supply services relating to land in another member state, you may be liable to register for VAT in that member state.

This notice deals only with the place of supply of land related services. You can find out about the liability by referring to VAT Notice 708: buildings and construction and VAT Notice 742: land and property.

If you are installing goods on land or in a property the question will arise as to whether you are performing a land related service or installing goods. See section 11 of VAT Notice 725: the single market. Whilst both are taxable in the country where the installation takes place there are differences in accounting treatment.

If your contract is to supply standard goods, without any alteration to meet the specification of the client, which you are contracted to install or assemble, either by you or someone acting on your behalf, you are providing goods to which the installation service is ancillary and is therefore treated as a supply of goods, for example the supply of studio recording equipment, where the supply involves the installation of the equipment at the customer’s studio. Such goods will normally be treated as supplied where they are installed.

But, if the service element becomes dominant because there is consultancy, design or diagnostic work, bespoke alteration or adaptation included in the contract, then it’s likely that you are providing a service to which the goods are incidental, for example construction or repair services. The service will be land related if, when installed or assembled, the goods become a fixture of the land or property that cannot be easily dismantled or moved.

If you’re supplying installed goods you’ll need to consider the accounting procedures in section 11 of VAT Notice 725: the single market.

If you are supplying land related services then the provisions of paragraph 7.6 will apply. If the recipient of the service is VAT registered in the country where the land is, they should use the reverse charge procedure to bring the VAT to account. If they are not VAT registered you’ll be liable to VAT in that country and may have to register there (see paragraph 5.9).

8. Hire of a means of transport

8.1 Introduction

To decide whether goods that you hire are a means of transport you must consider the actual nature and design of the hired goods. Means of transport include any vehicle, equipment or device, whether motorised or not, that’s designed to transport people or goods from one place to another. It includes vehicles designed to be pulled, drawn or pushed by other vehicles.

This objective consideration applies even where the intended, or actual, use of the hired goods may not be as a means of transport. For example, a yacht is a means of transport even if it’s to be used for racing, as is a train which may be leased to a transport museum.

8.2 Examples of means of transport

Examples of means of transport include:

  • ships, boats, yachts, hovercraft and barges
  • aircraft (including gliders, hot air balloons and helicopters)
  • cars, trucks, lorries
  • motorcycles, cycles
  • touring caravans and trailers
  • trailers and semi-trailers
  • railway wagons
  • vehicles designed for the transport of sick or injured persons
  • agricultural tractors and other agricultural vehicles
  • mechanically or electronically propelled mobility scooters

8.3 Examples of what are not means of transport

The following are not means of transport:

  • freight containers
  • mobile cranes
  • combine harvesters
  • static caravans

8.4 The place of supply rules

There are different rules for the place of supply of services of hiring out means of transport depending on who receives the supply and whether the hire is short-term or long-term.

8.5 How do I distinguish between short-term and long-term hire

Short-term hire means a continuous period not exceeding 90 days if the means of transport is a vessel and not exceeding 30 days for any other means of transport. Any hire beyond this period is a long-term hire. To decide whether a particular hire is short-term or long-term hire you should look at the hire contracts as follows.

If Then
2 or more separate contracts for the hire of the same means of transport follow each other with 2 days or less between them The term of the first contract needs to be considered in order to decide whether the second term is short-term or long-term. Where the 2 contracts together exceed 30 days (or 90 days for vessels) then the second and subsequent consecutive contracts are treated as long-term hires. If the first contract is genuinely of a short-term hire it will remain so.
There is a second separate contract for short-term hire between the same 2 parties If that second separate hire contract relates to a different means of transport or the terms of the hire differ significantly, the contracts will need to be considered separately.
A short-term hire contract is extended If the extension means that it exceeds the 30 or 90 day period, the place of supply is determined by the long-term hire rule, unless it can be satisfactorily demonstrated that the circumstances leading to the events were outside the control of the parties involved.

8.6 Short-term hire

For both B2B and B2C supplies, the short-term hiring of a means of transport is treated as supplied where the vehicle is put at the disposal of the customer. This is the place where the customer takes actual physical control of the means of transport (for example, where the vehicle is located when the keys are handed over).

8.7 B2B services of long-term hire

A B2B supply of the long-term hiring of means of transport is subject to the general rule for the place of supply of services and so supplied where the customer belongs.

8.8 B2C services of long-term hire

Since 1 January 2013 the place of supply of a B2C long-term hire of means of transport is made where the customer belongs, unless it is a long-term hire of a pleasure boat that is put at the disposal of the customer at an establishment of the supplier. In this case, the place of supply is that place.

A long-term hire of a pleasure boat put at the disposal of the customer anywhere other than where the supplier has an establishment, is treated as made where the customer belongs.

From 1 January 2010 to 31 December 2012, B2C supplies of the long-term hire of means of transport were subject to the general rule for the place of supply of services and so made where the supplier belongs.

8.9 Additional rules

There are additional rules for all hired goods (including any hire of means of transport) depending on where the supply is used and enjoyed, which if applicable will override these rules - see section 13.

8.10 The liability of these supplies

When supplied in the UK, the hire of certain ships and aircraft is zero-rated, see Ships, aircraft and associated services (Notice 744C).

9. Services supplied ‘where performed’

9.1 Introduction

Services covered by this section are those that relate to an event or physical performance.

There are separate rules for B2B and B2C supplies. For B2B, only the charge for the admission to an event, and any services ancillary to admission, are taxed at the place of where the event takes place. For B2C supplies the scope of supplies taxed where performed is far wider and includes services relating to cultural, artistic, sporting, scientific, educational, entertainment and similar activities.

9.2 B2B supplies of admission to an event

The only B2B service taxable where performed is the admission to an event. All other B2B services are determined under the general B2B rule.

When determining whether a service is one of admission to an event it’s important to consider firstly whether an event is taking place and secondly whether the payment made relates to admission.

An event is characterised by a gathering of people to watch or take part in an activity for a short or limited time rather than an ongoing basis. The most common forms of event are sports matches, theatrical or musical performances, conferences, exhibitions, seminars and trade shows. It also includes amusement parks, tours or visits around stately homes.

Admission is any payment that gives an individual or group the right to attend an event. In most cases this will be clear, such as a ticket to attend a football match or the theatre. But, in some cases the customer may consider that their aim is not to attend but to gain some other benefit. But, if the payment gives the right to attend an event it’ll be regarded as a charge for admission. For example, a customer may attend an educational seminar or class to learn about a subject. The aim is to benefit from a lecture. But, if a payment is made giving a right to attend the lecture it’ll be regarded as admission.

9.3 Services regarded as admission to an event

The following are examples of services that are seen as being admission to an event:

  • a payment for the right to enter and visit a trade show
  • a short-term educational conference or seminar
  • the hire of a corporate box at a sport event (such as a cricket or rugby match)

The following are examples of services that would not be seen as admission to an event:

  • the supply of a stand with the right to exhibit at a trade show or exhibition
  • the supply of an educational course, with either ongoing attendance or significant course work
  • the supply of organising a conference or exhibition, including where an event is put on for a single customer
  • the supply by a singer to a promoter of appearing at a concert

9.4 Ancillary services to admission to an event

Services ancillary to admission are those that are supplied to a person attending an event for separate payment and are directly connected to the admission. Examples of ancillary services would include the charges for the use of cloakroom or sanitary facilities. It does not include charges by agents for arranging the supply of admission.

9.5 B2C services relating to cultural, artistic, sporting, scientific, educational, entertainment and similar activities

Where B2C services are provided in connection to cultural, artistic, sporting, scientific, educational, entertainment or similar activities these services will be taxable at the place where they are performed. This is not limited to the supply of admission as it is for B2B services described in paragraph 9.2.

In most cases, the activity will normally be related to an event, although not necessarily only for a limited duration. But, the supplier and the customer will normally be present at the same place during the service.

The following are examples of services taxed where they’re performed when supplied B2C:

  • a singer performing at a wedding or party
  • tours around a museum or stately home
  • the entrance fee into a sporting competition
  • wedding or party planning that includes attendance at the event
  • a classroom educational course

9.6 Restaurant and catering services

The place of supply of restaurant and catering services is where the services are physically carried out.

The place of supply of restaurant and catering services supplied on-board a ship, aircraft or train for the transportation of passengers on an intra-EU journey is the member state of departure.

Where a journey involves both intra-EU and international legs the journey is divided up into the stages between those that are between EU countries and those that are not.

9.7 Work carried out on goods

B2C supplies of valuation of, or work on, goods are supplied where those services are physically performed. For the purposes of this rule, goods are all forms of tangible moveable property. This includes both finished commodities and raw materials but not immoveable property such as land or permanently installed goods as described in section 7.

B2B supplies of such services are subject to the B2B general rule.

Work carried out on goods is essentially any physical service carried out on another person’s goods. Examples include:

  • processing, manufacturing or assembling
  • repairs, cleaning or restoration
  • alterations, calibrations, insulating, lacquering, painting, polishing, resetting (of jewellery), sharpening, varnishing, waterproofing
  • nominations to stallions, covering (that is, attempting to secure the pregnancy of mares)

Amongst the types of service not included as valuation services or work on goods are:

  • work which is not mainly physical work performed on the goods themselves, for example inspection for a purpose other than valuation
  • testing and analysis of goods - the physical work simply provides data for the required analysis
  • valuation of, or work carried out on, land or property
  • veterinary services

10. Passenger and freight transport

For information about passenger transport see VAT Notice 744A: passenger transport and for freight transport see VAT on freight transport and associated services (Notice 744B).

11. Intermediary services

11.1 Introduction

An intermediary for the purposes of this section is any person acting as a third party in arranging, or facilitating, the making of supplies. An intermediary arranges supplies between 2 other parties - a supplier and that supplier’s customer. Intermediaries may be referred to as brokers, buying or selling agents, go-betweens, commissionaires or agents acting in their own name. Payments for their services are often described as commission.

In this section, your customer is the person to whom you supply your intermediary services. This can be either the supplier or the recipient of the arranged supply (and in some cases may be both).

If you establish that the place of supply of your intermediary services is the UK you should then consider whether zero rating applies, see section 16.

11.2 B2B intermediary services

B2B intermediary services fall under the B2B general rule and are supplied where the customer belongs.

11.3 B2C intermediary services

The place of supply of your intermediary services is where the underlying arranged supply is made. For example, if you arrange services connected to land, the place of supply of your services will also be the place where the land is situated. It’s therefore important to consider the place of supply of the goods or services being arranged.

11.4 Registration implications of non-UK intermediaries arranging supplies made in the UK

If you’re a non-UK supplier of B2C intermediary services arranging a supply in the UK, you are responsible for accounting for any UK VAT due on your supply. If you are not already registered in the UK, you’ll probably be liable to register. For information about registration, see VAT Notice 700/1: should I be registered for VAT?

11.5 When I may be liable to register in other member states

If you supply B2C services of arranging a supply which is supplied in another member state and your customer is not EU VAT registered or otherwise in business, you may be liable to register for VAT in that member state.

12. B2C services of a professional, technical, financial, intellectual or other intangible nature supplied to customers outside the EU

12.1 Introduction

This section applies if:

  • you belong in the UK
  • you supply B2C services to customers who belong outside the EU
  • those services are included in the list in paragraph 12.2

Where this applies, your services are supplied where your customer belongs and so are outside the scope of VAT. It’s the nature of the service that you should consider, rather than your professional qualification or status.

Additional rules apply to B2C letting on hire of goods and radio and television broadcasting services (see section 13).

Where this section applies you should obtain sufficient factual evidence showing that your customer belongs outside the EU.

12.2 Services treated as supplies

The following services are treated as supplied in the place where the customer belongs when provided to non-EU non-business customers:

  • transfers and assignments of copyright, patents, licences, trademarks and similar rights
  • acceptance of any obligation to refrain from pursuing or exercising a business activity
  • advertising services
  • services of consultants, engineers, consultancy bureaux, lawyers, accountants, and other similar services - data processing and provision of information, other than any services relating to land
  • banking, financial and insurance services
  • the provision of access to, or transmission or distribution through, natural gas and electricity systems and heat or cooling networks and the provision of other directly linked services
  • supply of staff
  • letting on hire of goods other than means of transport
  • emissions allowances

These are intellectual property rights which are capable of being legally enforced. Payments for these intellectual rights are often known as ‘royalties’. Services which do not involve intellectual property aren’t covered even though they may be described as a right or licence.

Examples include the:

  • transfer of permission to use a logo
  • granting of a right for photographs to be published in a magazine article, including material which is digitally downloaded to the customer

Examples of services excluded from this description are the supply of:

  • individual shares in goods, for example an animal or yacht, even though certain rights may be included in the supply
  • a right to obtain reduced rates for admission to conferences and meetings as well as similar discounts on facilities available to members of clubs, associations or societies in return for a subscription
  • the right to occupy land or property including hotel accommodation (see section 7)

12.4 Acceptance of any obligation to refrain from pursuing or exercising, in whole or part, any business activity

This covers entering into agreements not to pursue or undertake any business activity and or refraining from exercising, or relinquishing, intellectual property rights.

12.5 Advertising services

Advertising services include all services of publicising another person’s name or products with a view to encouraging their sales.

Advertising or promotional messages may be disseminated in numerous ways. This sub-paragraph applies to everything provided as part of an advertising campaign, even if elements of the campaign would have fallen under other place of supply rules or been treated as a supply of goods had they been supplied in isolation.

12.6 Services of consultants, engineers, consultancy bureaux, lawyers, accountants, and other similar services - data processing and provision of information, other than any services relating to land

This covers a wide range of services of different natures. The services are those that have an advisory nature with a high degree of intellectual character. As well as covering the services normally provided by the professions listed, it also covers services that fulfil a similar function.

Where a supply of services covers services typically provided by more than one of the professions listed, it is not necessary to determine which description best describes the supply as the place of supply will be the same.

It does not matter how the services are delivered to a customer, which may be by electronic transmission, courier or mail.

Examples include:

  • written translation services or interpreters’ services which do not take place at an event conference
  • design or consultancy services by engineers who generally, but not always, possess formal qualifications - the services must be of a type expected of an expert or professional
  • legal and accountancy services in the general administration or winding up of a deceased’s estate, even if that estate includes land or property; such supplies are not made to beneficiaries but to the estate - this is seen as whoever is appointed executor or administrator, although they may also be a beneficiary
  • architects’ services where there is no specific site of land
  • tourist information
  • weather forecasts
  • information supplied by a private enquiry agent

But, where any of these services relate to land or property they are excluded.

This category does not include:

  • services of lawyers, surveyors and consultants where these directly relate to a specific piece of land or property
  • services carried out by an engineer which consist wholly or mainly of physical work on goods, including installation of goods
  • management, clerical or secretarial services, which includes the keeping of financial records, unless the essential nature of the service falls within the services provided by a consultant, lawyer, engineer as described

12.7 Banking, financial and insurance services (including reinsurance), other than the provision of safe deposit facilities

This covers all banking, financial and insurance services. Many, but not all, of these are exempt when made in the UK. See Insurance (Notice 701/36) and VAT Notice 701/49: finance.

12.8 The provision of access to, and transport or transmission through, natural gas and electricity distribution systems and the provision of other directly linked services

This covers supplies of services which allow access to, and actual use of, the distribution networks.

12.9 The supply of staff

A supply of staff is the placing of personnel under the general control and guidance of another party as if they become employees of that other party. You must distinguish between a supply of staff and a supply of other services which you make by using the staff yourself. The latter is not a supply of staff, even if you charge by the hour. When a supplier uses employees to provide whatever service they are contracted to supply (under a contract for services) to a customer, it is not a supply of staff by the supplier but a supply of other services.

12.10 The letting on hire of goods other than means of transport

This covers the letting on hire, or leasing, of all goods other than those which are a means of transport (see section 6). Goods include all forms of moveable property but exclude land, property or equipment permanently installed.

This does not cover supplies of the letting on hire or leasing of goods where the services of an operator or technician are included. In such cases the place of supply of such services depends on the nature of the services provided.

12.11 Emissions allowances

Emissions allowances under the EU Emissions Trading Scheme (EU ETS), and instruments representing emission reductions, carbon credits, and certificates that identify that the production of energy has been generated from renewable sources include, but are not limited to:

  • Certified Emissions Reductions (CERs)
  • Renewal Obligation Certificates (ROCs)
  • Emission Reduction Units (ERUs)
  • Levy Exemption Certificates (LECs)
  • Assigned Amount Units (AAUs)
  • EU Allowances (EUAs)
  • Renewable Energy Certificates (RECs)

Verified Emission Reductions (VERs) are currently considered to be outside the scope of VAT. Where certificates or instruments are sold with goods or services they’ll usually be viewed as incidental or ancillary to the main supply. An example of this is where a guarantee of origin is issued to customers purchasing electricity that certifies the electricity was generated from renewable sources.

13. Use and enjoyment

13.1 Introduction

The use and enjoyment rules are intended to ensure taxation takes place where services are consumed where either services are consumed within the UK but would otherwise escape VAT, or they would be subject to UK VAT when consumed outside the EU. Use and enjoyment does not apply where services are subject to VAT in one member state but used in another.

Effective use and enjoyment takes place where a recipient actually consumes services irrespective of the contractual arrangements, payment or beneficial interest.

The services covered by these rules are:

  • the letting on hire of goods (including means of transport)
  • electronically supplied services (B2B only)
  • telecommunications services (B2B only)
  • repairs to goods under an insurance claim (B2B only)
  • radio and television broadcasting services

13.2 How the use and enjoyment rules work

The first step in applying use and enjoyment is to determine where the place of supply of the services specified above is in accordance with the other rules explained in this notice. When this is known, you must decide whether the service is being actually used, enjoyed and consumed in that location.

The use and enjoyment rules apply in either of the following situations where the place of supply would be:

  • the UK but the services are effectively used and enjoyed outside the EU
  • outside the EU but the services are effectively used and enjoyed in the UK

In these circumstances, the place of supply is where their effective use and enjoyment takes place. Where this is the UK, the services are subject to UK VAT.

A service is normally regarded as being used and enjoyed where the customer consumes the service. For example, this could be where the customer is when they:

  • make the telephone call - in the case of B2B telecoms
  • use goods under hire
  • watch a live broadcast
  • are a business and purchase downloaded information over the internet for use at a specific site
  • use repaired goods in the UK

Where a relevant service is partially used and enjoyed outside the EU, the supplier (or customer required to account for the supply) should carry out an apportionment based upon the extent to which it’s used and enjoyed outside the EU. UK VAT will only be due on the portion that is not used and enjoyed outside the EU. Similarly, where a supply would be outside of the scope of EU VAT but is partially used and enjoyed within the UK, UK VAT will be due on that portion of the service that’s consumed here.

Examples include:

  • a Canadian company hires out recording equipment to a UK private individual who uses the equipment in his UK home; the place of supply is the UK - this is because the goods are used and enjoyed in the UK and the place of supply would otherwise have been outside the EU
  • an Australian tourist hires a video camera from a UK provider during a visit to the UK - the place of supply is the UK - this is because the goods are used and enjoyed in the UK and the place of supply would otherwise have been outside the EU
  • a UK golf shop hires out a set of golf clubs to a UK customer for use on a holiday in the USA - the place of supply is outside the EU if the customer is able to demonstrate that the golf clubs are used and enjoyed only in the USA - this is because the goods are used and enjoyed outside the EU and the place of supply would otherwise have been the UK
  • an individual hires a yacht which is put at his disposal in the Channel Islands - the vessel is sailed to the UK where it spends 21 days of the 28 hire - as the means of transport is effectively used and enjoyed in the UK for 3 of the 4 weeks that it’s supplied, UK VAT is due on this percentage of the hire
  • a UK based airline hires a small passenger aircraft on a 6 month lease - the aircraft is used exclusively on a route flying between 2 cities in the USA - although the place of supply of the aircraft would be the UK, where the customer belongs, the supply is outside of the scope of VAT because it’s used and enjoyed outside of the EU
  • a USA business purchases web-hosting services for its international business, including its UK branch - although the supply is received in the USA, to the extent that it’s used in the UK, it’s subject to UK VAT
  • a UK business purchases downloaded information from another UK business for use both in its UK headquarters and its Canadian branch - although the supply is received in the UK, to the extent it’s used in Canada, it is outside the scope of UK VAT - UK VAT is due only to the extent of use by the UK headquarters
  • a UK business rents telecommunication capacity to connect it to an overseas third party call centre provider, this allows data to be transferred between the 2 in the furtherance of the UK business’s activities - the place of supply is the UK as this is where the recipient of the service is consuming the supply
  • a UK garage repairs a car as a result of a claim made by a UK insured person under a contract with a Gibraltarian insure - the work is performed in the UK and the car is registered for use in the UK - the service discharges the insurer’s obligation to the insured party for a vehicle to be used in the UK - the place of the supply of the repairs is the UK

13.3 Telecommunication services supplied up to 31 October 2017

With one exception, B2C telecommunications services were subject to UK VAT when supplied to UK residents or used and enjoyed in the UK by visitors from countries outside the EU. Examples included public payphones and charges for calls made from hotel rooms. But, elements of telecommunications services used in the UK were ignored if they were:

  • simply an incidental part of an established telephone contract or account held by a customer who belonged outside the EU
  • used by a non-EU temporary visitor
  • HMRC was satisfied that these conditions were not being abused

The exception to this rule was that if a UK resident used telecommunications services outside the EU under such an account with a UK provider, those services were outside the scope of UK VAT, provided that evidence was retained to substantiate the element of use and enjoyment that occured outside the EU.

13.4 Telecommunications services supplied from 1 November 2017

From 1 November 2017 the law changed in relation to B2C telecommunications services, and the rule concerning the place where the services were used and enjoyed was withdrawn. Consequently supplies of such services by UK suppliers to UK residents are now always subject to VAT. Supplies to visitors from countries outside the EU are no longer subject to UK VAT.

13.5 Accounting for VAT

If you provide services to which the use and enjoyment provisions apply, and the services are used and enjoyed in the UK but would otherwise be outside of the scope of UK VAT, you’ll need to consider who is responsible for accounting for the VAT. If the supplier belongs outside of the UK and you, the business customer, belong in the UK (and are VAT registered in the case of hire of means of transport), it’s you, the customer that accounts for the VAT using the reverse charge procedure (see section 3). In other circumstances the supplier is required to register and account for VAT on the supply.

13.6 Your liability to register in other member states

If you supply the letting on hire of any goods, telecommunications services, radio television broadcasting and electronically supplied services where the place of supply would be outside the EU under sections 6, 12 or 13 and the services are effectively used and enjoyed by your customer in another member state, you may be liable to register for VAT in that member state (see paragraph 2.9). If you supply telecommunications, broadcasting or electronically supplied services on a B2C basis you should refer to sections 14 and 15.

14. B2C supplies of digital services

14.1 Introduction

If you supply digital services B2C then the place of supply of your services will be the place where your customer belongs. If your customer belongs:

  • in the UK then UK VAT will be due
  • in another member state then VAT will be due in that country according to its rate and rules and you’ll be required to either register in that member state or register for the MOSS (see section 15)
  • in another country - you’ll need to check that country’s rules as you may have to register for VAT or its equivalent in that country

For EU VAT you can assume your supply is made on a B2C basis if your customer does not provide you with a VAT number.

More details on the scope of the services covered can be found at VAT: supplying digital services to private consumers.

Detailed guidance can be found in the EU Commission’s Explanatory Note.

15. MOSS special accounting schemes for digital services

15.1 Introduction

VAT MOSS is an optional, simplified, way of declaring VAT on B2C supplies of digital services in EU member states in which you are not established. Rather than having to register with every EU member state where you sell to consumers, VAT MOSS allows you to register in one member state and account for VAT on all your B2C supplies of digital services across the EU electronically via a single calendar quarterly return.

See section 14 for a definition of digital services and paragraph 2.4 for an explanation of B2C supplies. See VAT Mini One Stop Shop: register and use the service for more details on scheme registration.

The EU Commission has produced a practical guide for MOSS users.

16. Zero rating

16.1 Introduction

In certain circumstances, specific services may be subject to the zero rate of VAT when supplied in the UK. These services are:

  • intermediary services
  • training performed for overseas governments
  • work on goods for export

16.2 Intermediary services

You can zero rate the supply of the making of arrangements for:

  • the export of any goods to a place outside the member states
  • a supply of services which is itself zero-rated as work on goods for export from the EU
  • any supply of services which is made outside the member states

Zero rating under these provisions only applies to the actual making of arrangements for eligible supplies. It does not extend to services which simply facilitate supplies.

For more information see:

16.3 Examples of zero-rated intermediary services

Examples of zero-rated intermediary services include:

  • arranging an order for an overseas buyer to purchase UK goods that are exported from the EU - you must obtain valid evidence of export
  • arranging for a person in the UK to provide a repair service on goods that are imported into the EU and then re-exported once the work has been carried out
  • arranging a consultancy service for a UK business, to be provided to a Canadian customer - this is because the place of supply of the consultancy service is outside the EU and so you are making arrangement for a supply outside of the EU

16.4 Examples of intermediary services that are not zero-rated

Examples of intermediary services that are not zero-rated include:

  • the making of arrangements for the supply of exempt insurance or finance - for more information on this see Insurance (Notice 701/36) and VAT Notice 701/49: finance and securities
  • the making of arrangements for a supply of freight transport - but, it may be eligible for zero rating under a different provision, see VAT on freight transport and associated services (Notice 744B)
  • services supplied by a person acting as a principal, even if their trading title or classification includes the word ‘agent’ or ‘agency’
  • acting as an intermediary in arranging a supply of services within the EU
  • arranging for a supply of goods which are supplied within the EU, and those goods remain in the EU

16.5 Training performed for overseas governments

Training services supplied in the UK to overseas governments for the purposes of their sovereign activities, that are not already exempt from VAT, see VAT on education and vocational training (Notice 701/30), can be zero-rated under an extra-statutory concession. See VAT Notice 48: extra statutory concessions.

The relief does not apply if services are received for business purposes. It therefore excludes the training of personnel from government owned industries or sponsored commercial organisations such as state airlines or nationalised industries.

But, such businesses may be able to claim a refund of VAT paid in the UK. See Claim back VAT paid in the EU if you’re established elsewhere (Notice 723A).

16.6 How do I work out if I can zero rate my supplies to overseas governments

If you supply training services to foreign or overseas governments your supply will be zero-rated provided both of the following conditions are met:

  • the services must be used by the foreign or overseas government for the furtherance of its sovereign activities (that is not for business purposes)
  • you must obtain and keep a written statement from the foreign or overseas government concerned, or its accredited representative, certifying that the trainees are employed in furtherance of its sovereign activities

16.7 What a foreign or overseas government means

A foreign or overseas government includes:

  • overseas government officials
  • public servants
  • members of organisations such as the
    • armed forces
    • police
    • emergency services
    • similar bodies answerable to the government concerned

16.8 Associated services

Zero rating only applies to the supply of the actual training and does not extend to any associated services which are supplied separately, such as accommodation or transport.

16.9 Work on goods for export

Work on goods for export from the EU is zero-rated provided that all of the following conditions are met:

  • the goods on which the work is to be carried out must have been obtained, acquired within, or imported into the EU for the purposes of being worked on
  • the goods must not be used in the UK between the time of leaving the supplier’s premises and exportation
  • on completion of the work, the goods are intended to be and, in fact are, exported from the EU by either
    • the supplier of the service (or someone acting on their behalf)
    • the customer (or someone acting on their behalf), if the customer belongs outside the EU

16.10 Examples of work on goods

Examples of work on goods which may qualify for zero rating under this section include:

  • alterations and repairs, calibrations, cleaning, insulating, lacquering, painting, polishing, resetting (jewellery), cutting (of precious stones), sharpening, varnishing and waterproofing
  • repair of freight containers
  • services relating directly to the ‘covering’ (that is, attempting to secure the pregnancy) of a mare, provided the mare is exported before the birth of the foal
  • gelding or breaking in of young horses (for example training yearling racehorses to the stage where they can be ridden safely in races) - but, actual racing is not accepted as training and if any horse is acquired or temporarily imported with the intention of racing it in the EU before re-export, zero rating will not apply
  • restoration of classic cars

16.11 Exclusions

Examples of services which do not qualify for zero rating under this section include:

  • work which is not physical work carried out on the goods themselves (for example, mere inspection of goods or testing and analysis of goods is not ‘work on goods’)
  • repair or other work which becomes necessary in the EU after acquisition or importation of goods, such as incidental running repairs, while the goods are being used (even though they may be subsequently exported)
  • valuation services

16.12 Export evidence you need

In order to zero rate a supply of such services you must obtain and keep satisfactory official or commercial evidence of the export of the goods to a place outside the EU. Examples of acceptable evidence of export are contained in VAT on goods exported from the UK (Notice 703).

If, in anticipation of export to a place outside the EU, you zero rate your supply under this item but, in the event, the goods are used in the EU before export or export does not take place, you’ll need to reconsider both the place of supply of your services and, if it’s the UK, the appropriate VAT rate that applies.

17. Help us improve this notice

If you have any feedback about this notice please email: customerexperience.indirecttaxes@hmrc.gsi.gov.uk.

You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice or have another VAT question you should phone our VAT helpline or make a VAT enquiry online.

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Published 24 February 2010