VAT and innereuropean services

shatter

Hi!

My company is residing in Sligo and provides IT services for German customers, all of them are commercial companies with VAT Ids.
Up to now I thought that - provided they and I have a VAT ID - no VAT would be appliable on the invoices.
Now one of the customers suggests that this might be otherwise.
What is correct - where to look for more infos?

tx,

Joachim

BuffyBot

You district tax office - check out www.revenue.ie for details

ConsultClifford

shatter wrote:

Hi!

My company is residing in Sligo and provides IT services for German customers, all of them are commercial companies with VAT Ids.
Up to now I thought that - provided they and I have a VAT ID - no VAT would be appliable on the invoices.
Now one of the customers suggests that this might be otherwise.
What is correct - where to look for more infos?

tx,

Joachim

i think you have to register for vat in germany and pay the vat there. no vat would be payable in ireland...

antoinolachtnai

It doesn't make much sense for you to register for German VAT if you deal exclusively with trade (i.e., not retail). They would only be getting a refund on the VAT anyway. It makes no sense at all to charge Irish VAT, because the German company won't be able to get a refund on it. I suspect that someone on the German side doesn't quite understand how the whole European VAT system fits together. It often happens, some genius moves into the accounting department and just assumes that every invoice for a similar service should look the same, with the same rates charged. But it's just not true. There are loads of exceptions and special cases in European VAT law.

I would just ask the Jobsworth to explain why it is that they think you need to pay VAT.

For more information, I would start with the Revenue in Ireland. If you speak German, then ask the German authorities. There is a EU office somewhere which is supposed to be in charge of the whole mess, and I would think the Revenue will refer you to them if nothing else works.

(One possible gotcha: if you are providing ongoing services mainly on-site in Germany, perhaps as a consulting contract, the the German Tax Office would be within its rights to demand that your company establish and register a branch office within Germany. Then you would have to register for German VAT, assuming your German business is above the treshold. But this is only incidentally a VAT issue, it's a more general tax, legal and regulatory issue.)

ck1

There are a number of goods that can be sold both in a tangible form and a digital form downloaded by the customer. Under the new EU VAT rules, effective 1 July, 2003, the supply of digitised goods such as software, music etc, are treated for VAT purposes as if they were services when they are delivered electronically and are now taxed as electronically delivered services. An electronically supplied service is one, which is delivered over the Internet and is heavily dependent on Information Technology for its supply. This can include updating of software, web site supply, web hosting, distance maintenance of computer programmes, supply of text and information, making databases available and distance teaching.

The general rule is that the supply of services by a business established in Ireland to a business customer in another country is liable to Irish VAT. If you supply services in the first paragraph, or certain services linked to international trade, the VAT legislation provides that in most instances the obligation to account for VAT on the supply rests with the customer rather than the supplier. In these circumstances you are not liable to Irish VAT but instead it is the customer receiving the service who must account for the VAT due on the receipt of the services under his own national VAT rules. This accounting mechanism, where the customer has to account for the VAT due, is known as the "reverse charge". You should be aware, however, that even where reverse charge procedure applies, certain countries place joint and several liability on the supplier for the VAT due on the transaction, in the event that the customer defaults in paying the VAT to the tax authorities. You should, therefore, ensure that you are commercially protected against this exposure where it does arise.

I know that this sounds very confusing but VAT Leglisation is very complication. I suggest that you speak to your accountant on the Reverse Charge System and also check out the agreement with the countries that you supply to.

Victor

shatter wrote:

My company is residing in Sligo and provides IT services for German customers, all of them are commercial companies with VAT Ids.

Are these companies based in Germany or Ireland?

ck1

Oh, I forgot, the supply to other EU consumers rather than EU Business Customers is treated differently. In anyway, I suggest that you take professional advice as VAT is one area that the Revenue do look into and it is an absolute minefield. As from 1 Jan 2003 (I think) the revenue laid down some hard ground rules as to what must be on invoices both purchases and sales. Effetively if the invoices does not show the net amount, vat rate, vat amount, supply date, numbered numerically, etc, it is not a valid VAT invoice.