VAT Importing Services from Europe
Introduction
VAT registered businesses are required to account purchases of services from Europe on their VAT return using the reverse charge (Tax Shift) policy.
The reporting of imported services from the EU on the VAT Return requires specific entries to be completed on the VAT Return as directed by HMRC.
https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a
Importing Services from the EU
It is important to identify and separate goods from services when purchasing from the European Union.
BCE users are likely to be using the consumable stock type to identify both goods and services for their own consumption when purchased within the UK.
If consumable stock type items are purchased from the EU, it is not possible to identify whether the consumable stock items are of goods or service type.
Therefore, in conjunction with the Postponed VAT Accounting changes introduced in BCE v1.7.1, from 1 January 2021 consumable items purchased from European suppliers using VAT type ‘EU Import’ will be treated as goods.
It is recommended that purchases of services from the EU use stock items set up as services stock type to conform to the following VAT reporting requirements:
Purchase of Services from the EU
When using VAT type ‘EU Import’ purchases of service type items will respect the reverse charge (tax shift) policy and report the values on the VAT return within the following boxes:
Box 7: Full value of the supply in box 7 (total value of purchases)
The value of the Purchase invoice from the overseas supplier
Box 6: Full value of the supply in box 6 (total value of sales)
This negates the value reported in box 7 but represents the reversed value
Box 1: Amount of output tax in box 1 (VAT due on sales)
This negates the value reported in box 4 but represents the reversed value of VAT based on the VAT rate of the service item as setup in BCE
Box 4: Amount of input tax in box 4 (VAT reclaimed on purchases)
This is the VAT value on the full supply VAT reported in box 7 based on the VAT rate of the service item as setup in BCE
