Q: We are a new company, British registered, advertising property in Portugal. We charge buyers a one off fee if they purchase a property. Is my fee subject to VAT. Please advise.
Feb 20 2007
Answered by: Clive Lewis Ask a question
To be within the UK VAT system a supply must be made in the UK. Supplies made outside the UK are outside the scope of VAT. However the services are supplied in the place where you belong (this is known as the basic rule) unless they are of a type for which there are special place of supply rules.
It is important to bear in mind that the service is not advertising. No doubt advertising will be the main cost of the business but the service is similar to an estate agent's service. The UK legislation for determining where services are supplied is the Value Added Tax (Place of Supply of Services) Order 1992 (SI 1992 No.3121). Paragraph 5 deals with services relating to land. "Services such as are supplied by estate agents, auctioneers, architects, surveyors, engineers and others involved in matters relating to land ... shall be treated as made where the land in connection with which the supply is made is situated." Accordingly, even though the supplier and the customer belong in the UK the service is treated as supplied in Portugal.
Under the EU legislation the wording is:
"…the place of the supply of services connected with immovable property, including the services of estate agents and experts, and of services for preparing and co-ordinating construction works, such as the services of architects and of firms providing on-site supervision, shall be the place where the property is situated."
You need to seek advice from an expert on VAT matters in Portugal but it is likely that registration for VAT in that country is necessary.
The same outcome is arrived at if the service you provided is considered not as an estate agency service but more akin to the services of a relocation consultant. The services of a relocation consultant also appear to be supplied where the land is situated if the charge is related to a specific property and is only charged if that property is bought.
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