European Taxation – VAT (value added tax, purchase tax)

This is one of the most important issues that needs to be addressed when supplying a European solution.

VAT is operated completely differently in the EU when compared to the USA.  All transactions attract VAT with the exceptions of food and children’s clothing.   In any quarter, Comec will collect VAT on all its in-country sales.  At the end of the quarter, we deduct all the VAT we have paid on our purchases in that time period from that total amount and this leaves the amount we have to pay over to the revenue.  VAT works in this way right across the EU.

Rates of VAT differ across Europe, varying from 7 – 29%.

If, in conjunction with a US Business Partner, Comec are to make a supply to a UK address, VAT will be charged, but the client will claim that back at the end of the quarter.  Please note that if Comec are to supply within the UK, but invoice the US for this supply, VAT will have to be charged and this amount will be lost as it is not reclaimable in the US, effectively meaning the client will pay an inflated cost.

For supplies made by Comec from the UK to all other EU countries, VAT need not be charged so long as our invoice clearly shows the clients in-country VAT number on our invoice.

Goods imported from any country outside of the EU attract VAT at the port of entry into Europe.

All supplies within Europe should, wherever possible, be invoiced from the UK to the client’s European entity.  This arrangement differentiates Comec and their US Business Partners from its competitors who have little understanding of international taxation. 

Clients appreciate that we not only supply their Avaya solutions but also consider the financial implications of those supplies.