VAT rules

[jtnire]

Hi Everyone,

 

I am UK based.

 

Does anyone know the correct VAT rules when supplying VPS hosting services worldwide?

 

What is everyone else here using in the WHMCS Tax Rules?

 

Many Thanks

[openmind]

If you supplying any services within the UK you charge VAT.

 

If you supply outside of the UK and within the EU you charge VAT

 

If your customer is in the EU and they can provide you with a valid VAT number then you don't have to charge VAT but you will need to account for it separately when you do your VAT return.

 

Outside of the UK/EU then you do not charge VAT.

 

We have all the EU countries setup top be charged VAT and if a customer supplies us with a VAT number we then get rid of the VAT element prior to the sale.

 

Simples

[jtnire]

Cheers Phil

 

At the minute, I have all the EU countries set at 17.5% (Same as you I think).

 

I image to remove the VAT is just a matter of editing the invoice before it is paid?

 

Also, if I supply to EU customers outside of UK, but charge them UK VAT, do I have to accout for it separately on my VAT return?

 

Also, when do I have to submit a EC Sale List?

 

Thanks

[openmind]

You shouldn't really edit the invoice after it's been generated but you can set the option to not charge VAT in the customer profile.

 

On the VAT return there is a section for non-vat sales and your sales list is normally completed one month after the return. Ring the HMRC helpline for clarification though...

[jtnire]

Hmmm ok.

 

So can you just guide me through the process please? Is it:

 

- Customer phones/emails me with a VAT number.

- I manually create an account for them and set them to charge no tax (I have to do it manually as register is disabled without placing an order)

- Then they login with the details I gave them, and they place an order, tax free

 

Is that correct?

 

When you complete your Sales list, how do you sort all sales by EU country?

 

Thanks

[openmind]

That's pretty much it although there is a mod floating around that will handle the input of VAT numbers and check if they are valid so a bit of automation is possible.

 

I tend to just accept the order and then refund the vat element when required. For the reporting I have some in house scripts that interrogate whmcs and calculates the vat return and sales list.

 

Before you ask though, sorry I cannot release it as it's tied in with our other systems

[ServWise.com]

If you look at the examples provided for hook points in WHMCS then you should find one that allows checking of VAT numbers locally.

 

also see http://wiki.whmcs.com/Hooks

 

Also here is a working php script that validates VAT online against VIES. (They recently changed their checking method so broke a common checking script)

 

Combining these scripts you can validate VAT number when a client signs up and set vat exempt or not based on this. We have it all in AJAX so the check is done live and if a VAT exists, validates and the country is right then the customer is vat exempted.

 

Our AJAX script only checks numbers that have been locally validated first (for formatting) with VIES to save calling them for every badly formed vat number entered.

[vchosting]

I had not included VIES - that's great thanks!

[jtnire]

Thanks everyone for the replies - very helpful

 

I've been in touch with my accountant, and he says that if the person isn't a business, regardless of where they are in the world, you have to charge UK VAT. This would include non-EU countries such as USA.

 

Is this true?

[openmind]

I'd say get a new accountant as that's completely wrong

 

If you don't believe me, call the HMRC help line 0845 010 9000 and ask them for clarification.

 

Then sack your accountant

[ServWise.com]

I'd say get a new accountant as that's completely wrong

 

If you don't believe me, call the HMRC help line 0845 010 9000 and ask them for clarification.

 

Then sack your accountant

 

+1

 

I agree, your accountant is wrong, anyone purchasing from outside of the EU should not be charged VAT.

[openmind]

Scares the crap out of me for people who have been incorrectly advised like this by so called professionals, makes you wonder what other mistakes they are making...

[jtnire]

Thanks Guys,

 

I have a funny feeling that he went by the "General VAT rules", however Web/VPS hosting does have "special rules". I'll give HMRC a call, but it's good to know that other in the same industry and here to help

 

Cheers

[othellotech]

I agree, your accountant is wrong, anyone purchasing from outside of the EU should not be charged VAT.

 

If the place of supply is the UK - then yes, you charge VAT irrespective of where they are unless

1. they're in the EU and provide a validated EU VAT number

2. the're outside the EU and a registered *business*

 

ISTR it all changed in January 2010

[ServWise.com]

If the place of supply is the UK - then yes, you charge VAT irrespective of where they are unless

 

Don't you mean if the place of consumption is the UK?

 

If my client is in the US and orders hosting they are consuming my services from the US, no matter if the actual servers are US or UK based. If I was selling books and they purchased and read a book in the UK and had no intention of taking it back to the US then yes VAT would be applicable as they are consuming my book in the UK.

 

 

If the place of supply is the UK - then yes, you charge VAT irrespective of where they are unless

1. they're in the EU and provide a validated EU VAT number

2. the're outside the EU and a registered *business*

 

ISTR it all changed in January 2010

 

I'm not saying you are wrong, (IANAA) but it is the first I have heard and if such monumental changes to VAT in the UK had happened then I would have thought it would be front page news.

 

I am however not based in the UK and so Italian law applies to me (Although I am a Brit so keep a keen eye on UK news), but AFAIAA you are somewhat wrong with your above statements.

 

I believe to be VAT exempt it should be

 

1. they're a business in the EU (excluding your home country) and have provided a validated EU VAT number.

2. they're outside the EU (I don't believe being a business has any relevance in this case)

[othellotech]

Yes, it's place of supply, and no it'snot a monumental change, the basic rules have been the same since 1985 ...

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

[jtnire]

Hi Rob,

 

So what is the best way for me to approach this, in an WHMCS context? Just ask for a VAT number if EU (excluding UK), and ask to prove that they are a business for non-EU?

 

Thanks

[othellotech]

So what is the best way for me to approach this, in an WHMCS context? Just ask for a VAT number if EU (excluding UK), and ask to prove that they are a business for non-EU?

 

Yes and yes

 

Simply always charge VAT

 

Let EU clients know that if they supply you with a valid VAT certificate or number and you check it yourself (a scan of the cert goes down better in a vat inspection though) then you can set them as VAT exempt 9and report the sales on your EC Sales List)

 

Let o/seas (outside EU) clients know that if they're regostered as a legitimate business, if they supply the url to check that and a copy of their incorporation certificate you can mark them as vat exempt (technically you still charge VAT but the rate of the VAT is 0% instead of 17.5%)

[jtnire]

For non-EU customers, do they have to be an incorporated business? Will a "Sole Trader" not be enough?

 

Also, for non-EU clients, if they are a verified business, is it ok to just check the "Do not charge Tax" box in their WHMCS profile?

[jtnire]

Hi Othelletech,

 

I've been doing a lot of reading of the UK VAT rules this evening. I have seem to have found a section that states that B2C sales for non-EU customers are also VAT exempt. Please go to

 

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_PROD1_029955&propertyType=document#P234_30705

 

and look at Section 14.3 "What is the place of supply of my services if my customer belongs outside the EC?". This section will refer you to Section 15, which includes "Web Hosting" services (which is pretty much the same as VPS hosting services as far as VAT is concerned).

 

Please correct me if I'm wrong.

 

Thanks

[rycardo74]

hi i found a simple solution for the italian vat or fiscal code:

 

this is the regexp code:

 

/^[A-Z]{6}\d{2}[A-Z]\d{2}[A-Z]\d{3}[A-Z]$|^[0-9]{10,11}$/

 

 

http://www.auyama.it

http://hosting.gnoky.com