VAT rules within EU


H

Hazel

Please would someone be able to advise me about VAT rules between EU
countries?

We live in France, run a small business and are not registered for VAT.
We recently had some goods delivered from Ireland and other goods
collected and returned to Ireland. The transport company quoted the
price for the transport and said that VAT was not payable since the
goods were being shipped between countries and the invoice was going to
France. Goods were transported, cheque given to driver as arranged. We
then received an email from the shipping company saying that they had
made a mistake and that their accountant says that we should have been
charged VAT after all. They are now asking for a cheque for the VAT or
suggesting that they leave the "figures as they are at the moment" (ie
with no VAT number from France) but that if the Irish VAT people pick up
on this they may pass on our details to the French VAT people.

Where do we stand with this please? We were specifically told, and we
questioned to make sure since we are not familiar with VAT rules, that
VAT was not applicable. The company are not denying that they made the
mistake, which we believe to have been genuine. If we had known that VAT
was to be added this would have increased the price and may have
affected our decision to use this company. Do we just have to pay up?
Would we have a case if we said that it was his mistake and therefore he
should pay for it by adjusting his price so that the total we paid
includes the VAT? Who would the VAT officers feel was in the wrong here
if we were to leave the figures as they are?

Any thoughts would be most welcome
TIA
Hazel
 
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A

Andy

Hazel said:
Please would someone be able to advise me about VAT rules between EU
countries?

We live in France, run a small business and are not registered for VAT.
We recently had some goods delivered from Ireland and other goods
collected and returned to Ireland. The transport company quoted the
price for the transport and said that VAT was not payable since the
goods were being shipped between countries and the invoice was going to
France. Goods were transported, cheque given to driver as arranged. We
then received an email from the shipping company saying that they had
made a mistake and that their accountant says that we should have been
charged VAT after all. They are now asking for a cheque for the VAT or
suggesting that they leave the "figures as they are at the moment" (ie
with no VAT number from France) but that if the Irish VAT people pick up
on this they may pass on our details to the French VAT people.

Where do we stand with this please? We were specifically told, and we
questioned to make sure since we are not familiar with VAT rules, that
VAT was not applicable. The company are not denying that they made the
mistake, which we believe to have been genuine. If we had known that VAT
was to be added this would have increased the price and may have
affected our decision to use this company. Do we just have to pay up?
Would we have a case if we said that it was his mistake and therefore he
should pay for it by adjusting his price so that the total we paid
includes the VAT? Who would the VAT officers feel was in the wrong here
if we were to leave the figures as they are?

Any thoughts would be most welcome
TIA
Hazel
I do a lot of work with Belgium and providing the goods are transferred
between countries VAT does not have to be charged PROVIDING you can show
your VAT number.

If you were a UK or Belgium company if you are not VAT registered you would
have to pay VAT.

I assume this goes for a French company as well, remember the basic concept
of VAT is to tax Joe Public :), companies just act as unpaid tax
collectors :)

Not what you wanted to hear I think.

Andy
 
D

Doug Ramage

Hazel said:
Well, no, but thanks anyway :) We now know that VAT *should* have been
charged. The question really was, can he ask for the VAT at this stage,
after goods have been delivered, invoice paid etc, having specifically
told us that it wasn't payable? ie, can he effectively raise the price
after the job has been done?

H
If your supplier forgot to add Vat, then it's his/her problem and I don't
think he/she can *demand* the missing Vat.

However, if you want to continue to deal with that supplier, some compromise
may be required.
 
H

Hazel

If you were a UK or Belgium company if you are not VAT registered you would
have to pay VAT.

I assume this goes for a French company as well, remember the basic concept
of VAT is to tax Joe Public :), companies just act as unpaid tax
collectors :)

Not what you wanted to hear I think.
Well, no, but thanks anyway :) We now know that VAT *should* have been
charged. The question really was, can he ask for the VAT at this stage,
after goods have been delivered, invoice paid etc, having specifically
told us that it wasn't payable? ie, can he effectively raise the price
after the job has been done?

H
 
R

Ronald Raygun

Doug said:
If your supplier forgot to add Vat, then it's his/her problem and I don't
think he/she can *demand* the missing Vat.
It's not an accounting but a legal issue, and it's not clear-cut. What he
can demand is what was agreed in the contract, and it may be difficult to
establish exactly what that was, especially if not all of it was in writing.
Usually you would agree an ex-VAT price, with it being understood that VAT
will be added except when exporting to a customer VAT-registered in another
EU country.

The supplier has made the mistake either of not knowing that VAT should
be added (for example because his export experience has been limited to
EU VAT-registered customers and to non-EU customers, and so wrongly assumes
that all exports are VAT-free), or of assuming this customer was registered
when in fact she was not. Whether such a mistake can be treated as
having contractually agreed an all-in price is something I wouldn't
like to rely on.
However, if you want to continue to deal with that supplier, some
compromise may be required.
Of course.
 
K

Keith

Hazel <[email protected]> said:
Well, no, but thanks anyway :) We now know that VAT *should* have been
charged. The question really was, can he ask for the VAT at this stage,
after goods have been delivered, invoice paid etc, having specifically
told us that it wasn't payable? ie, can he effectively raise the price
after the job has been done?
That, I suggest, is a commercial matter, rather than a (statutory) VAT
matter.

Just to clarify the previous posting, VAT *is* chargeable inter-EEC. The
current rate is 0% and forms the basis for inter-country VAT accounting
(Intrastat).

If the (EEC) customer is VAT registered the 0% rate should be used. If
the (EEC) customer is not VAT registered the supplier's domestic rate of
VAT should be charged.
 
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V

vatark

Hazel said:
Please would someone be able to advise me about VAT rules between EU
countries?

We live in France, run a small business and are not registered for VAT.
We recently had some goods delivered from Ireland and other goods
collected and returned to Ireland. The transport company quoted the
price for the transport and said that VAT was not payable since the
goods were being shipped between countries and the invoice was going to
France. Goods were transported, cheque given to driver as arranged. We
then received an email from the shipping company saying that they had
made a mistake and that their accountant says that we should have been
charged VAT after all. They are now asking for a cheque for the VAT or
suggesting that they leave the "figures as they are at the moment" (ie
with no VAT number from France) but that if the Irish VAT people pick up
on this they may pass on our details to the French VAT people.

Where do we stand with this please? We were specifically told, and we
questioned to make sure since we are not familiar with VAT rules, that
VAT was not applicable. The company are not denying that they made the
mistake, which we believe to have been genuine. If we had known that VAT
was to be added this would have increased the price and may have
affected our decision to use this company. Do we just have to pay up?
Would we have a case if we said that it was his mistake and therefore he
should pay for it by adjusting his price so that the total we paid
includes the VAT? Who would the VAT officers feel was in the wrong here
if we were to leave the figures as they are?

Any thoughts would be most welcome
TIA
Hazel
Are you asking whether VAT is due on the transport? Or on the goods
you bought?

The goods element is relatively simple and has been covered by others
responding to your posting. The supplier of the goods, being outside
France but within the EU, should charge you their local VAT rate if you
can't provide a VAT number. (If you're in France, why aren't you VAT
registered? I thought they didn't have a registration limit. Or am I
wrong?)

The intra-EU transport issue is a bit more complicated. The notes I
have say that the supply takes place in the country in which the the
transportation of the goods begins, so local VAT is applicable. If the
customer gives a VAT number the place of supply becomes the country in
which the customer is resident, but only if the supply is then treated
as being in another EU country. That's from the guidance I have. The
translation reads like this:

If you are in one EU country and are not VAT registered, and the
transport company is in another EU country (the same one where the
transport begins) they have to charge local VAT. If you have a VAT
number, the haulier doesn't charge VAT but you have to account for VAT
under the reverse charge rules at the rate prevailing in your country.

In the UK the haulier would have to account for VAT out of the amount
you'd paid, as if was inclusive of VAT. The haulier could ask you for
the VAT, but I doubt they could *demand* it from you. Whether you pay
it depends on whether you want to work with that company again.

--
Best wishes


Robert Killington
for help with VAT visit www.vatark.co.uk
 
T

Tim

Hazel said:
(e-mail address removed) wrote
"Hazel" wrote
Well, no, but thanks anyway :) We now know that VAT
*should* have been charged. The question really was, can he
ask for the VAT at this stage, after goods have been delivered,
invoice paid etc, having specifically told us that it wasn't payable?
ie, can he effectively raise the price after the job has been done?
I am not an accountant, and know nothing of French tax/law either - but :-

Was the shipping company providing you with a "service" (transportation of
goods - and where VAT is payable on the price) - or were they acting as your
"agent" (transporting the goods in your name, but just "helping" by
collecting the VAT from you & passing on to the tax authorities) ?

If they were providing a "service" :-
As far as I know in the UK (perhaps similar in France?), the responsibility
for paying over VAT to the authorities lies with the person/company who
should be *charging* VAT - *not* with the person who would be *paying* it.

So if anyone would "get into trouble" with the VAT people, I would think it
likely that it would be the shipping company - they are possibly just
"trying it on" to see if they can get you to pay the VAT anyway!

If they were acting as your "agent" :-

Can you pay the VAT, but also then try sueing them for inappropriate advice
(to reclaim back the amount of VAT!) ?
 
H

Hazel

Frederico Fonseca wrote in message ...
I am replying to this message because it is the last in the thread. Many
thanks to everyone who replied. I would like to crosspost this to
uk.business.accountancy but I believe that uk.legal.moderated does not
allow this, so I am posting separately to the two groups with quotes
from both groups. Hope this is OK with the original posters and that it
is clear.

This is what I would like to be the case. I personally would pay for my
mistake in this case, had it been mine. But obviously my feelings bear
no relation to the legal issues.
This is the key part. If they quoted including VAT that is one thing,
if they quoted as VAT excempt or "reverse charges apply" (which is
common when VAT is paid by the customer where the customer is a VAT
registered entity on another EU country), then he may still be
required to pay the VAT without fuss.
It really depends on all the wording on both the invoices and the
contract he exchanged.
and in uk.bus.accountancy, Ronald Raygun said:
It's not an accounting but a legal issue, and it's not clear-cut. What
he can demand is what was agreed in the contract, and it may be
difficult to establish exactly what that was, especially if not all of
it was in writing.
It was agreed that there was the transport cost and no VAT, see below.
Usually you would agree an ex-VAT price, with it being understood
that VAT will be added except when exporting to a customer
VAT-registered in another EU country.
The supplier has made the mistake either of not knowing that VAT
should be added (for example because his export experience has
been limited to EU VAT-registered customers and to non-EU
customers, and so wrongly assumes that all exports are VAT-free),
I think this is exactly what happened.
or of assuming this customer was registered when in fact she
was not.
This is also a possibility, but I think less likely, since if in doubt
he could have asked initially if we were VAT registered.
Whether such a mistake can be treated as
having contractually agreed an all-in price is something I
wouldn't like to rely on.
You have hit the nail on the head here, this is my question really.

The initial contract was by telephone only. The man from the transport
company did not at any time say that VAT was included. He said that VAT
was not payable since the invoice was going to France, and confirmed
this when asked again by telephone. This is not in dispute, we have two
emails in which he says that he made a mistake when he said that VAT
was not payable. He did not ask if we had a VAT number until after his
accountant pointed out the problem, after goods were delivered, cheque
paid and invoices issued. (Incidentally, goods transported were already
owned by us and VAT paid in the countries where they were purchased, so
the issue here is the transport only, not the goods)

We have two invoices, one for the outward trip and one for the return
trip. Each states the charges at xxx euro, the Tax at 0.00 euro and a
code relating to the tax, which is "2". There is then an explanation of
the tax code, which says:
1. Standard Rate Tax Total @ 21%
2. Zero-Rated Tax Total @ 0%

Then the bottom line says:
Your VAT (a hash symbol then a dash) then Total amount due in ECU/Euro
xxx and in the tax code column it says XEU.

Is XEU a recognised code on an invoice? Or perhaps it is an internal
code used by this company only?
If it turns out that all points to him having to pay the VAT then he
may try and get a discount from the supplier as a goodwill gesture,
but this may not be accepted by them.
This may well be our next step but I wanted to find out where we stood
legally first if possible.

Does this make anything clearer, does anyone have further comments?
Thanks again for everyones interest
H
 
T

Tim

The haulier could ask you for the VAT, but I doubt they
could *demand* it from you. Whether you pay it depends
on whether you want to work with that company again.
I'd have thought it *wouldn't* depend on whether you want to work with that
company again :-

If you *don't* want to work with them again, then (if you don't need to
legally) don't pay the VAT.

If you *do* want to work with them again, and they still demand the VAT to
be paid - well, I'd certainly then decide I *didn't* want to work with them
again!
 
H

Hazel

Tim said:
I am not an accountant, and know nothing of French tax/law
either - but :-

Was the shipping company providing you with a "service"
(transportation of goods - and where VAT is payable on
the price) - or were they acting as your "agent" (transporting
the goods in your name, but just "helping" by collecting the
VAT from you & passing on to the tax authorities) ?
Hmm, from your descriptions I am afraid I am still not sure. We already
owned the goods in both cases and had already paid VAT on the goods
themselves in the countries where they were purchased. The transport
company just transported the goods for us. So I think they were
providing a "service" - is this correct? The VAT should have been
payable on that service, but the company told us that it was not.
If they were providing a "service" :-
I will assume they were for the moment....
As far as I know in the UK (perhaps similar in France?), the
responsibility for paying over VAT to the authorities lies
with the person/company who should be *charging* VAT
- *not* with the person who would be *paying* it.

So we need to know if the laws differ within EU countries.
So if anyone would "get into trouble" with the VAT people,
I would think it likely that it would be the shipping company
- they are possibly just "trying it on" to see if they can get you
to pay the VAT anyway!
This was how it appeared to us. At the moment they have not charged VAT
where they should have done. They presumably have a blank space in their
"books" where they should have a VAT registration number for us.
If they were acting as your "agent" :-

Can you pay the VAT, but also then try sueing them for
inappropriate advice (to reclaim back the amount of VAT!) ?
Wouldn't be worth risking that I don't think. If it gets that far we
will just have to pay!
Thanks
H
 
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H

Hazel

vatark said:
snip...

Are you asking whether VAT is due on the transport? Or on the goods
you bought?
Sorry I didn't make this clear. VAT has already been paid on the goods
and we now know that it should have been paid on the transport too.
(If you're in France, why aren't you VAT registered? I
thought they didn't have a registration limit. Or am I
wrong?)
I'm afraid I have to tell you that you are wrong. One doesn't have to
register for VAT below a certain turnover limit, roughly 27500 euro at
the moment. One can choose to register if it is advantageous, but in our
case it is not.
The intra-EU transport issue is a bit more complicated. The notes I
have say that the supply takes place in the country in which the the
transportation of the goods begins, so local VAT is applicable. If the
customer gives a VAT number the place of supply becomes the country in
which the customer is resident, but only if the supply is then treated
as being in another EU country. That's from the guidance I have. The
translation reads like this:

If you are in one EU country and are not VAT registered, and the
transport company is in another EU country (the same one where the
transport begins) they have to charge local VAT. If you have a VAT
number, the haulier doesn't charge VAT but you have to account for VAT
under the reverse charge rules at the rate prevailing in your country.
Many thanks for that, especially the translation!
In the UK the haulier would have to account for VAT out of the amount
you'd paid, as if was inclusive of VAT.
Ah, thank you. So we need to find out if the same applies in Ireland. I
always thought that EU laws, including VAT rules, were the same in all
EU countries unless there some some special exemption (although they are
not always applied!) but I could be wrong, I have never needed to know
before.
The haulier could ask you for
the VAT, but I doubt they could *demand* it from you.
At the moment they are giving us the option to pay or saying

"1) I can leave the figures as they are at the moment but if I get a
VAT inspection the VAT inspectors may pass your details to the
French VAT people if they notice the situation."
Whether you pay it depends on whether you want to work
with that company again.
As Tim said in his reply, whether we wanted to work with them again
might well depend on how they handle this! As it happens it is unlikely
that we will ever need to use their services again anyway...

If legally we have to pay at this late stage, we will do so. If legally
we do not, we probably won't!

thanks again
H
 
D

DoobieDo

Please would someone be able to advise me about VAT rules between EU
countries?

We live in France, run a small business and are not registered for VAT.
We recently had some goods delivered from Ireland and other goods
collected and returned to Ireland. The transport company quoted the
price for the transport and said that VAT was not payable since the
goods were being shipped between countries and the invoice was going to
France. Goods were transported, cheque given to driver as arranged. We
then received an email from the shipping company saying that they had
made a mistake and that their accountant says that we should have been
charged VAT after all. They are now asking for a cheque for the VAT or
suggesting that they leave the "figures as they are at the moment" (ie
with no VAT number from France) but that if the Irish VAT people pick up
on this they may pass on our details to the French VAT people.

Where do we stand with this please? We were specifically told, and we
questioned to make sure since we are not familiar with VAT rules, that
VAT was not applicable. The company are not denying that they made the
mistake, which we believe to have been genuine. If we had known that VAT
was to be added this would have increased the price and may have
affected our decision to use this company. Do we just have to pay up?
Would we have a case if we said that it was his mistake and therefore he
should pay for it by adjusting his price so that the total we paid
includes the VAT? Who would the VAT officers feel was in the wrong here
if we were to leave the figures as they are?

Any thoughts would be most welcome
TIA
Hazel
they are correct, you pay the VAT

If you were registered you'd reclaim it

send the cheque off
 
K

Keith

At the moment they are giving us the option to pay or saying

"1) I can leave the figures as they are at the moment but if I get a
VAT inspection the VAT inspectors may pass your details to the
French VAT people if they notice the situation."
I don't think you have anything to worry about on this score, as you're
not VAT registered in France and, as Robert points out, the onus is on
the supplier to account for the VAT if the purchaser is unregistered.

A point - are you talking substantial sums here?
 
V

vatark

Hazel said:
I'm afraid I have to tell you that you are wrong. One doesn't have to
register for VAT below a certain turnover limit, roughly 27500 euro at
the moment. One can choose to register if it is advantageous, but in our
case it is not.
Thank you for the information. I've learned something!

Best wishes

Robert Killington
for help with VAT visit www.vatark.co.uk
 
A

Andy

Just to clarify the previous posting, VAT *is* chargeable inter-EEC. The
current rate is 0% and forms the basis for inter-country VAT accounting
(Intrastat).

If the (EEC) customer is VAT registered the 0% rate should be used. If
the (EEC) customer is not VAT registered the supplier's domestic rate of
VAT should be charged.
Rather better put than me :)

Guess you are an accountant as you certainly sound like mine (grin)

Andy
 
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H

Hazel

vatark said:
Thank you for the information. I've learned something!
Nowhere near as much as I have I suspect! Also that is only half the
story. That figure is for people providing services only, for people
providing goods/materials the figure is about double that. Not by
coincidence I suspect, the same figures are the upper limits for people
trading as a "micro-enterprise", which requires much simpler book
keeping and tax/social insurance returns - and no accountants :) - for
those just starting a business or wishing to keep their business small.

Thanks again
H
 
H

Hazel

Keith said:
I don't think you have anything to worry about on this score, as you're
not VAT registered in France and, as Robert points out, the onus is on
the supplier to account for the VAT if the purchaser is unregistered.
Sorry for the delay, my computer has been misbehaving. Thanks again for
that.
A point - are you talking substantial sums here?
Well, yes and no, the VAT is 325 euros. A more substantial sum for a low
income family of six than for an international shipping company I
imagine, but again that has no relevance to the issue. Does anyone feel
that would be considered "too small an amount to chase" as someone said,
or a sum likely to be picked up on?

H
 
P

Peter Saxton

Hmm, from your descriptions I am afraid I am still not sure. We already
owned the goods in both cases and had already paid VAT on the goods
themselves in the countries where they were purchased. The transport
company just transported the goods for us. So I think they were
providing a "service" - is this correct? The VAT should have been
payable on that service, but the company told us that it was not.

I will assume they were for the moment....

- *not* with the person who would be *paying* it.

So we need to know if the laws differ within EU countries.


This was how it appeared to us. At the moment they have not charged VAT
where they should have done. They presumably have a blank space in their
"books" where they should have a VAT registration number for us.


Wouldn't be worth risking that I don't think. If it gets that far we
will just have to pay!
Thanks
H
It looks like they quoted you a price and said there would be no VAT
added so you should pay that price and they should account for it as
VAT-inclusive.
 
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P

Peter Saxton

they are correct, you pay the VAT

If you were registered you'd reclaim it

send the cheque off
No.

The contract was for a price which would not have any VAT added
therefore the agreed price should be VAT-inclusive.
 

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