Any EU VAT experts in the house?
Discussion
We're building a website for a client that allows families to arrange language study holidays and exchanges (eg sending your kid to stay with a French family for a month to be 'culturally enriched'). It's basically a matchmaking service for those offering to host and those seeking a host. The service is offered worldwide but it's mostly European families using it at the moment. It's also a consumer level service.
They're not supplying digital goods so it doesn't come under the new regulations introduced in January (thank god!). That said, I'm still having trouble getting my head around how we should be applying VAT to sales. My understanding is that VAT is levied according to where the service is considered to be supplied (ie, at UK rates). This means (I think!) that any EU regional variations won't apply (eg Ireland's 23% rate or even the reduced rates offered in some regions such as French overseas departments like French Guiana).
However, there are some territories, nominally within the EU, that are outside the scope of VAT (eg, Canary Islands, or the Greek region of Mount Athos etc). So, the question is whether these regions are considered outside the EU for VAT purposes for a service supplied in the UK? I'm guessing yes, but it's far from clear.
Can anyone shed any light on this?
They're not supplying digital goods so it doesn't come under the new regulations introduced in January (thank god!). That said, I'm still having trouble getting my head around how we should be applying VAT to sales. My understanding is that VAT is levied according to where the service is considered to be supplied (ie, at UK rates). This means (I think!) that any EU regional variations won't apply (eg Ireland's 23% rate or even the reduced rates offered in some regions such as French overseas departments like French Guiana).
However, there are some territories, nominally within the EU, that are outside the scope of VAT (eg, Canary Islands, or the Greek region of Mount Athos etc). So, the question is whether these regions are considered outside the EU for VAT purposes for a service supplied in the UK? I'm guessing yes, but it's far from clear.
Can anyone shed any light on this?
It's VAT Notice 741A. Accommodation would be supplied at the location of that accommodation, which would be tricky, so you need to be clear that you aren't arranging accommodation. I think that would probably rule out a "pay on success" fee, but a "registration fee" for matchmaking would be a service provided within the UK by the looks of it.
I'm not an EU VAT expert.
I'm not an EU VAT expert.
Has your client taken professional advice on whether they are providing an E-Service? Online dating agencies are an E-Service and so subject to the new VAT rules and the service as described would seem to fall in to the same category. See here and here for more information.
Edited by plasticpig on Saturday 25th April 18:37
Thanks chaps. I have to say that the new VAT rules for EU sales are completely bonkers 
Only in the insane hivemind of a government bureaucracy would this ever be considered a valid solution to a (non-)problem.
However, I read somewhere that if the e-service is not fully automated, but has an element of personalisation or human input then these new rules do not apply.
I will advise my client to go back to their accountants and get a definitive answer (if indeed that's possible) with the reasoning behind it.
ETA: my client has been in contact with HMRC and has written confirmation that the new e-service rules do not apply to them due to the extensive manual validation they undertake. Not that this will stop them changing their position at a later date (as happened to another client
)
Only in the insane hivemind of a government bureaucracy would this ever be considered a valid solution to a (non-)problem. However, I read somewhere that if the e-service is not fully automated, but has an element of personalisation or human input then these new rules do not apply.
I will advise my client to go back to their accountants and get a definitive answer (if indeed that's possible) with the reasoning behind it.
ETA: my client has been in contact with HMRC and has written confirmation that the new e-service rules do not apply to them due to the extensive manual validation they undertake. Not that this will stop them changing their position at a later date (as happened to another client
)Edited by judas on Monday 27th April 11:07
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