VAT charged on storage fees for overseas customer?
Q. Our business provides storage facilities in a UK warehouse, mainly to business customers who need to keep stock and assets there. We have agreed a long-term contract to store some goods for a French-based business, which is registered for VAT in France but not the UK. Do we charge VAT on our fees to this customer?
A. The answer here is “it depends”. If you give the customer a specific area of land in your warehouse to store their goods, you are making a land supply. In such cases, the place of supply for VAT purposes is where the land is based, which means you will charge UK VAT on your fee income. However, all is not lost because the customer will hopefully be able to claim a VAT refund from HMRC by making an overseas repayment claim. However, if you store goods in your warehouse without the customer getting a specific area of land, then you are making a supply of services which is covered by the general business-to-business rule, whereby the place of supply is where your customer is based, which is France. In such cases, you do not charge UK VAT because the customer will account for VAT on their French return by doing a reverse charge calculation. You can still claim input tax on any related expenses because the supply would be VATable if charged to a UK customer.
Create your profile to unlock this advice and many more.