Place of supply rules

When the Single Market was established in the European Union, an effort was made to ensure that different tax rates in the member states would not be a factor when choosing suppliers. A system is in place which ensures that whichever country the supplier is based in (either in or outside the EU), the customer always pays the VAT rate of their own country.

This system applies to those supplies where the “place of supply” is with the customer. Almost all supplies are defined in this way - the only exceptions are certain services (see below), and goods which do not enter the UK.

Example (i) - a French consultant writes a report for a British customer. The French supplier does not charge VAT, but the British customer accounts for VAT at the UK rate on the cost of the supply.

Example (ii) - an overseas supplier carries out maintenance on equipment sited outside the UK which belongs to a British customer. Again, the British customer must account for VAT at the UK rate on the cost of the supply.

Goods

Goods purchased from outside the EU

The invoice from the foreign supplier will not have VAT on it.

Goods will have VAT (at the UK rate) charged to them at the port of entry. Normally, this is paid by the carrier (e.g. DHL) who will then pass the charge on to the University.

Goods purchased from inside the EU

The invoice from the EU supplier will not have VAT on it, so long as we have quoted the University's VAT registration no. (GB 639 5421 22) on the purchase order.

VAT (at the UK rate) will be accounted for when the invoice is processed in the Finance Office. Unless the VAT is recoverable (rare) this means an extra 20% is added to the cost.

Services

Since January 2010, the default position is that the Place of Supply of services is where the customer is based.

The effect of this is that when the University buys in services from anywhere in the world, it must account for VAT on the amount charged.

Services purchased from outside the EU

The invoice from the foreign supplier will not have VAT on it.

Services purchased from inside the EU

The invoice from the EU supplier will not have VAT on it, so long as we have quoted the University's VAT registration no. (GB 639 5421 22) on the purchase order.

In both cases, VAT (at the UK rate) will be accounted for when the invoice is processed in the Finance Office. Unless the VAT is recoverable (rare) this means an extra 20% is added to the cost.

The only exceptions to this are:

Land-related supplies (e.g. hotel bills)

short-term hire of means of transport (e.g. car hire) admission to events (e.g. conference fees). The Place of Supply for these services is deemed to be where the supplier belongs and will be taxed according to the rules in their country.