"GB" VAT number requirement - sounds silly, but is it?

"GB" VAT number requirement - sounds silly, but is it?

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nikman

Original Poster:

878 posts

204 months

Friday 17th March 2017
quotequote all
alfabeat said:
Well nothing there would be no requirement for an individual to provide a VAT number. But many individuals in Greece are registered for VAT as sole traders. If you do any work as a sole trader then you will be VAT registered.
Yes, that's correct. Supplying individuals, members of the public, end users, apparently is OK. This need for the business recipient of the goods or services to be able to provide a VAT number to the supplier in Spain, is, apparently, applies only to business to business transactions.

There is so much potenntial for confusion and misinterpretation published on "EU" websites such as these statements taken from http://ec.europa.eu/taxation_customs/business/vat/... :

Most businesses (and other persons carrying out an economic activity) need a VAT number (see Article 214 VAT Directive for full details).

In particular, business is obliged to register for VAT in the following cases:

when it carries out the supply of goods or services taxed with VAT;
when it makes an intra-EU acquisition of goods;
when it receives services for which it is liable to pay VAT (under Article 196 VAT Directive);
when it supplies services for which the customer is liable to pay VAT (under Article 196 VAT Directive).

So on first reading "when it receives services for which it is liable to pay VAT" could be construed to mean (and seemigly IS by the Spanish company's accountant)that any business receiving services "for which it is liable to pay VAT"(to it's supplier as charged by the supplier on invoice) must be registered.

EXCEPT "Liable to pay VAT" is more likely to mean liable to pay VAT to the local tax authority INSTEAD of the supplier in the case ofthe 'EU Reverse Charge' mentioned above. Because "liable to pay" is a liability and is different to being charged by a supplier on an invoice.

nikman

Original Poster:

878 posts

204 months

Friday 17th March 2017
quotequote all
monoloco said:
this is categorically just the 'normal' way of handling VAT on inter-EU country sales. As I explained above its called 'Reverse Charge' and avoids the various EU governments swapping VAT payments and reclaims back and forth. If both buyer and seller are VAT registered in their respective countries, the seller doesn't add VAT to the bill and the buyer accounts for both the 'input' and 'output' VAT on their own tax return. That is why if you look at a VAT100 form you will see there are boxes for Sales and Purchases of goods and services to/from other EU countries.

However, this would leave a blindingly obvious way of avoiding paying VAT -ie by claiming they are VAT registered when they aren't and therefore not getting charged VAT on the invoice, So, to avoid this the buyer has to provide their VAT number to the seller which they are then meant to check is valid. Simple.
All true except in THIS case the Spanish accountant has raised this "need" for the UK customer's VAT regustered number in the full knowledge that his client, the Spanish supplier, has invoiced the UK customer, added 21% IVA and the UK customer has paid the resultant invoices. So the "Reverse Charge" arrangements clearly aren't in play or needed here.

The view of the UK company is that so long as the Spanish IVA is being properly charged, paid by the UK customer then accounted for to the Spanish tax authorities then everyone's obligations are fulfilled. An informal discussion with another Spanish accountant yesterday, revealed that would be his view too. It's just a question of the Spanish business in question here, persuading their accountant of the same!

Any other views of course are welcome, but thanks to everyone who has contributed to this.