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HMRC internal manual

VAT Place of Supply of Services

Establishment making or receiving the supply: Global contracts

In order to determine the place of supply of a global contract, it is important to first of all distinguish between a global contract that forms a single supply for VAT purposes and a global framework agreement, often between the business head office and a supplier, that sets the terms for a number of individual supplies.

For example, a business could enter into a contract for a single supply of consultancy services. The consultancy services analyse the global set-up and business practices at the head office and overseas branches. HMRC would regard this as a global contract with a clear direct benefit to the business as a whole, including a number of establishments. In this scenario the services would be supplied to the main business establishment.

Where a framework agreement exists it is important to look at the individual transactions which, as separate supplies, will have separate treatments for VAT purposes. For example, a head office of a business could enter into a framework agreement with a global firm of consultants. The agreement specifies the fees, terms and conditions. Individual branches then draw up and purchase work from the local branches of the consultant under the terms of the framework. These services will be viewed as supplied to the branches even if the head office dictates the terms and receives an indirect benefit.