Accounting for VAT on services between the UK and EU member states from 1 January 2021
Updated 18 May 2022
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1. Overview
From 1 January 2021 following the end of the transition period with the EU the VAT rules applying for supplying services between the UK and EU member states will become the same as the current rules for supplying services from the UK to outside the EU.
This guidance explains how VAT will be charged and accounted for on services supplied from the UK to the EU.
2. Who should read this guidance
You should read this guidance if you supply services from UK to EU member states.
2.1 Use and enjoyment rules
If you’re supplying services from the UK that come under use and enjoyment rules and are effectively used and enjoyed outside the UK, they will be outside the scope of UK VAT.
2.2 Business to consumer supplies of a professional, technical and intangible nature
If you’re supplying services that are treated as supplies from the UK to consumers outside the UK, your services are supplied where your customer belongs and so are outside the scope of UK VAT.
Check which types of services that are treated as supplies made where the customer belongs.
2.3 European Community Sales List
UK businesses are no longer required to complete an EC Sales List when supplying services to businesses located in the EU.
2.4 Tour Operators Margin Scheme
The Tour Operators Margin Scheme will continue to apply to all tour operators located in the UK.
From 1 January 2021 the margin on designated travel services which take place inside the EU will be zero rated in line with the current treatment of supplies that take place outside the EU. The margin on those enjoyed in the UK will remain taxed at the standard rate.
2.5 Selling digital services to and from the EU
UK businesses will no longer be able to use the VAT MOSS system in the UK and the current EU-wide VAT threshold for supplies of digital services to consumers will cease to apply to UK businesses. This means that EU VAT will be due on all supplies of digital services to EU consumers, regardless of the value of the sales.
Find out how to pay VAT when you sell digital services to the EU.
If you’re selling digital services from the EU to the UK you will need to register and account for VAT.
2.6 Finance and insurance services supplied to persons outside the UK
If you make specified supplies from the UK to a person who belongs outside the UK you’ll be entitled to recover as input tax, VAT incurred on:
- financial services supplied to persons belonging outside the UK or directly related to an export of goods
- insurance services supplied to persons belonging outside the UK or directly related to an export of goods
- the making of arrangements for these specified supplies
VAT incurred before the end of the transition period that is used to make specified supplies to persons belonging in EU member states cannot be recovered.
Further information on the current rules for specified supplies can be found in: 701/49, 701/36, 706.
3. International trains
The services provided for the operation of international trains and the loading, unloading and storage of goods carried on them will become zero-rated provided the service is physically performed in the UK.