Supplying services to EU and VAT registration

Wonder if someone with a financial head on them can help me out!

I'm about to begin doing some editorial work for a company based in Germany. They say they need my VAT ID in order to pay invoices. I'm not VAT registered, don't need to be yet and don't particularly want to either ... but will I need to register in order to be able to work for this German company?

Hi Alison

If you are in the UK and the place of supply of your service is in another EU country, the supply is outside the scope of UK VAT. However, for some supplies, you may need to register and account for local VAT in the country of supply. You will need to check with the tax authority in that country to find out how to treat the services you are supplying.

here is link for more details

http://www.hmrc.gov.uk/vat/managing/international/exports/services.htm

Regards

Blimey, that's very confusing! As I said, the person I am supplying the service to is in Germany, I am in the Uk.

If you are in the UK and the place of supply of your service is in another EU country, the supply is outside the scope of UK VAT.

The general rule for working out the place of supply of services (apart from those covered by special rules)

You supply services to a:     The place of supply is:
business customer     the place where the customer belongs
non-business customer     the place where the supplier belongs

Hi Alison,

What Omer is saying is that (even if you did register for UK VAT) your sale to this German company would be deemed to be happening in Germany, hence wouldn't be subject to UK VAT.

As like you suggest you don't want to register for VAT, I suggest you simply explain to them that you're not VAT registered therefore don't have a VAT ID.

NB be aware in most European countries the VAT registration threshold is much lower than it is here, so there are fewer non VAT registered businesses.  Because of this, you do run the risk that they become suspicious and won't do business with you.

So you won't NEED to register to be able to work for that company (unless your turnover on that specific cliient exceeds the German VAT registration threshold in which case you'd need to register in Germany...but I doubt this), but you may find your client is uncomfortable using you if you're not (think of it like the dodgy handy man/whatever in the UK that insists you pay them cash).

Thanks - that's what I thought, and what an accountant friend had said, but they (the company) are insisting that both parties have the have VAT IDs!!

It is complicated see http://www.tmf-vat.com/vat/german-vat.html

NB they are noting to do with us but it seems a fair summary of the position and I don't have the time to write it.

Also if you are expecting considerable business from this German client then perhaps get vat registered, this way you are ready to capture more business in other EU countries.

Stupid thing is this is a tiny (but regular) editing job ... it will probably be bringing in no more than £50 a month at the absolute maximum! Seems like an awful lot of fuss (and I still don't understand!!)