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When I review my client’s VAT return today. I notice they set up a new VAT rate ‘Portuguese VAT – 23%’. I always thought Portugal is part of EU, it should be dealt with as other EU supplies which is ‘ zero rate EU purchase 0%’.
I am so confused, why Portugal is different? what the purpose of setting up this VAT rate 23%in UK’s system. or it is just client made mistake? and when I looked at box 8, box 9. it is blank. should it be ‘EU acquisitions’?
Thanks
The starting point is to find out what the 23% relates to?
You are right in terms of EU VAT treatment before BREXIT ie:
Goods
UK to EU (dispatch) – zero rated of business & VAT registered customer otherwise charge UK VAT.
EU to UK (acquisition) – reverse charge VAT
Services
Business (A) to Business (
– VAT place of business is country B.; therefore, services from UK to EU to business EU VAT applies to the business and hence zero rated in UK, quote VAT number and include on Sales list. Business to consumer – place of business is the business hence UK to EU, UK VAT applies.However there are cases where one may need to register for VAT in different EU countries if your client supplies cross-border telecommunication, television, and radio broadcasting, or digital services to non-taxable persons. You can google more about this on or find out here: https://europa.eu/youreurope/business/taxation/vat/vat-digital-services-moss-scheme/index_en.htm.
Otherwise, I suggest you get more information from your client.
Reghards
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