Pls somebody help me! I prepare VAT return for a dutch company, and there are some interesting transactions that I don't really understand.
The problem is that this company is located in on other company's office, and uses their equipment (mobiles, desks...). The second company recharges the mobile costs to my company, and I am not sure if they have to charge VAT or not. Both of them are registered in NL. On the original invoice there are zero rated items (international calls) and standard rated items too. What is the solution. The second co. has to recharge the gross amount + VAT, or is this transaction zero rated?
Both of them are based in Holland. I asked the F Manager and she said that all the office costs (mobile phones, paper etc.. ) are paid by the other company (I guess VAT is included on the third party invoices), and than they recharged the total amount to us. So.. Why I was a little bit confused is that the two company are subsidiaries of the same "parent" co. So it is an intercompany recharge. But it doesn't matter in VAT point of view. Does it?
The trickiest question is the salary recharge question. It is much more complex.. I don't want to bore you with that. (only if you are interested in this issue)
Don't worry this isn't boring in the slightest, it's why I became a bookkeeper!
Based on UK rules I think the transactions would be classed as inter-company recharges, and in my opinion the company charging the cost to the other subsidiary would need to charge VAT at the relevant rate on the invoice. The other company receiving the invoice would need to pay the VAT plus the net cost of the recharge, but would also be able to reclaim the VAT as input VAT on their VAT return.
It doesn't matter what costs are recharged, VAT would need to be added. So for salaries recharged, although normally outside the scope of VAT, you would need to add VAT to the invoice and the other company would again reclaim the VAT on their VAT return. Whether you class the expense of salaries as salaries or subcontract would be an issue, I would say subcontract but this is a different issue.
thanks so much for your help! About the salary recharges, You said, that VAT is due, if let's say... a UK company charge salary costs to a UK company.
But the situation is much more complicated. We have an other company (a commissioner) and my "little company" is located in their office. (I mentioned that they use the commissioner's office equipment).
The commissioner, and other EU companies (eg. from Greece) supply staff to my company. They have contracts with the staff, and they pay their salary. OK, it is clear, the commissioner charge local VAT, and we have to pay the gross amount. But the other companies charge through the commissioner. In practice: One invoice goes from Greece to the commissioner and one from the commissioner to my company. Normally it is a reverse charge transaction, but involving the commissioner, I am not really sure about it, because the second invoice will be "domestic" and cannot be reverse charge. Is it possible that after the commissioner received the invoice from Greece, will recharge it with VAT??
Sorry if my english is not understandable. I tried to do my best.
When an EU company in one state invoices a company in another EU state the transaction is not subject to VAT (as long as the VAT reg number is provided etc). Therefore the company based in Greece would not apply VAT to the invoice to the commissioner. The commissioner would then charge VAT on the invoice to your company which you could reclaim.
