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HMRC internal manual

VAT Place of Supply (Goods)

From
HM Revenue & Customs
Updated
, see all updates

Main rules: installed or assembled goods

EC Law

Article 36 Principal VAT Directive
 

  1. Where goods dispatched or transported by the supplier, by the customer or by a third person are installed or assembled, with or without a trial run, by or on behalf of the supplier, the place of supply shall be deemed to be the place where the goods are installed or assembled.

UK Law

Section 7 VAT Act 1994
 

7(3) Goods shall be treated -

(a) as supplied in the United Kingdom where their supply involves their installation or assembly at a place in the United Kingdom to which they are removed; and

  
  
(b) as supplied outside the United Kingdom where their supply involves their installation or assembly at a place outside the United Kingdom to which they are removed.

Commentary

The key here is that a supplier, or somebody acting on their behalf, is required (as part of the supply) to install or assemble the goods for the customer. In that case the place of supply is where the installation or assembly is carried out.

Some points to bear in mind are that the terms ‘installation’ and ‘assembly’ should be given their ordinary and everyday meaning. Typically a supply of this kind will involve complex machinery or equipment requiring the expertise of the manufacturer to make it operational. However, the rule applies wherever the contract between the supplier and customer requires an element of installation or assembly even though the installation or assembly element might seem relatively insignificant.

Separate contracts with the same supplier (i.e. one to supply the goods and the other to perform the installation or assembly) should normally be treated for place of supply purposes as a single supply of installed or assembled goods. Also, if the supplier of the goods sub-contracts the work of installation or assembly, the place of supply of the goods remains the place of installation or assembly.

Simplification arrangements

Depending on the circumstances an overseas supplier installing or assembling goods in the UK may be liable to register for VAT here even for a one-off supply. However, as an alternative, eligible EC traders can use a simplified procedure. You can find more details about this in the manual covering the Single Market.

There is a more limited simplification arrangement for installed or assembled goods imported from a third country. So long as it is a one-off supply the supplier can exceptionally treat the supply as taking place outside the UK. This requires the customer to act as the importer of the goods and the full contract price to be declared on the import entry.