8.00–17.00
When a company based in the EU issues an invoice to a UK customer, the VAT treatment depends on several factors, including whether the transaction is between businesses (B2B) or businesses and consumers (B2C).
1. B2B (Business to Business) Transactions
Post-Brexit: The UK is no longer part of the EU VAT system. Therefore, when an EU company sells goods or services to a UK business, the sale is generally treated as an export from the EU and an import into the UK.
VAT on the invoice: Typically, the EU company does not charge VAT on the invoice. The transaction is considered outside the scope of EU VAT and the reverse charge mechanism applies. This means the UK business will account for VAT in the UK using the reverse charge system.
The UK business would self-assess VAT on the transaction, which is reported on their VAT return.
Customs Duties: In addition to VAT, customs duties may apply for goods being sent from the EU to the UK, depending on the nature of the goods and their value.
2. B2C (Business to Consumer) Transactions
Goods: If the EU company sells goods to a UK consumer, VAT may need to be charged on the sale at the applicable UK rate.
The EU company will need to register for VAT in the UK if the sales exceed the threshold for distance selling or if it involves certain types of goods.
Services: For services, the VAT treatment depends on the type of service being provided. Many services provided by EU companies to UK consumers are subject to VAT in the UK, and the EU company may need to register for VAT in the UK to charge VAT on the invoice.
3. UK VAT Registration
If the EU business does not have a permanent establishment in the UK but is engaged in taxable activities (like selling goods or services that require VAT registration), it might need to register for UK VAT.
In short, for B2B transactions, the EU company typically does not charge VAT, and the UK business self-assesses VAT. For B2C transactions, the VAT treatment varies depending on the type of goods or services provided
