Potential EU & UK VAT loophole (this is crazy)

[BasedOperative]

Hi all,

I run a UK Limited Company and provide manually delivered consulting services (not automated) directly to private clients (B2C) in the EU.

After researching both UK and EU VAT rules, it appears that these services are:

• Outside the scope of EU VAT, because under EU VAT Directive Article 45, the place of supply for B2C services is where the supplier is established (i.e. the UK).
• Outside the scope of UK VAT, because under HMRC VAT Notice 741A, section 12, certain professional services (like consulting) are taxed where the customer belongs , which, in my case, is outside the UK.

So from both sides, this seems to mean:
No VAT is chargable at all - not UK, not EU.

This feels surprising, especially for B2C , I would have expected at least one side to want to tax the supply.

Can anyone confirm if this interpretation is correct in practice?
Are there any caveats I should be aware of?

• The clients are private individuals (not businesses, not VAT registered).
• The services are manually delivered (Zoom calls).
• I'm VAT registered in the UK.
• Clients are based in various EU countries (Germany, France, etc.).

I just want to be 100% sure before I continue invoicing without charging VAT.

Would appreciate any clarity or first-hand experience on this! Maybe some of you can exploit this little loophole too lol

Thanks in advance.

 

[lacomaco]

Hi all,

I run a UK Limited Company and provide manually delivered consulting services (not automated) directly to private clients (B2C) in the EU.

After researching both UK and EU VAT rules, it appears that these services are:

• Outside the scope of EU VAT, because under EU VAT Directive Article 45, the place of supply for B2C services is where the supplier is established (i.e. the UK).
• Outside the scope of UK VAT, because under HMRC VAT Notice 741A, section 12, certain professional services (like consulting) are taxed where the customer belongs , which, in my case, is outside the UK.

So from both sides, this seems to mean:
No VAT is chargable at all - not UK, not EU.

This feels surprising, especially for B2C , I would have expected at least one side to want to tax the supply.

Can anyone confirm if this interpretation is correct in practice?
Are there any caveats I should be aware of?

• The clients are private individuals (not businesses, not VAT registered).
• The services are manually delivered (Zoom calls).
• I'm VAT registered in the UK.
• Clients are based in various EU countries (Germany, France, etc.).

I just want to be 100% sure before I continue invoicing without charging VAT.

Would appreciate any clarity or first-hand experience on this! Maybe some of you can exploit this little loophole too lol

Thanks in advance.

Have a look at Article 59 too

 

[BlackVault]

Yes, that's correct - no VAT due on both sides. Even though you should really deliver services from the UK, or you could run into issues with permanent establishment and local VAT obligations in the EU country where you're physically located.

Article 59 doesn't apply in this scenario since the UK is not part of the EU anymore - it's now a third country, so the EU's "use and enjoyment" override rules don't reach UK suppliers.

 

[BasedOperative]

Yes, that's correct - no VAT due on both sides. Even though you should really deliver services from the UK, or you could run into issues with permanent establishment and local VAT obligations in the EU country where you're physically located.

Article 59 doesn't apply in this scenario since the UK is not part of the EU anymore - it's now a third country, so the EU's "use and enjoyment" override rules don't reach UK suppliers.

Thanks, good to know