VAT on international purchases

[rub1e]

Now that we are a UK company buying things from Europe-based companies and delivering them to another Portugal, there's a bit of VAT difficulties

For example, a recent Amazon purchase bought using the company Amazon account from a seller in Luxembourg was sent to Portugal and charged at Portuguese VAT rates (IVA @ 23%)

So the question is, how to account for this (and possibly related to #467 )

And that question will have to be asked to a professional 👩‍🏫 the next time we chat to our bookkeeper

Expenses this is relevant to

A short list of the larger expenses this is most pertinent to:

• AzulVanguarda deposit invoice (only one)
• All Palhagua plumbing invoices
• All Big Architectura invoices

[rub1e]

Bumping up priority and time allocation because this is more complicated than I thought - goods and services are VATted differently, for example.

Will book some time with our bookkeeper and update the issue then

[rub1e]

Our bookkeeper says she's not hot on int'l VAT so have approached our accountants to see if their VAT dept can help

[rub1e]

Our accountants say they can research any questions we have about international VAT and debrief us at a rate of £100/hour.

Before we ask them to do this, let's get the questions straight!

• We buy lots of stuff from Amazon. Sometimes no VAT is charged, sometimes UK VAT (20%) is charged and we can reclaim it, and now it seems that Portuguese IVA (23%) is being charged depending on where the purchase is being sent (or where it originated from, unclear)

  • What do I put in Xero for a purchase with IVA on it?
  • Can we reclaim IVA in the same way as we do VAT?

• What about "pure Portugal" purchases that just have IVA as you'd expect

  • What can we reclaim in terms of office supplies, office equipment, training materials etc.
  • My understanding is that the Portuguese construction work IVA wouldn't usually be reclaimed through HMRC as it's land related services. Is it usually possible to reclaim land-related services under the Portuguese system?
  • Consequently is the easiest way to go about it to get IVA registered in Portugal, or not?

• Not Portugal-related, but the reverse-charge is how to account for when an international supplier just doesn't charge VAT (HMRC pretends you've been charged and then refunded, so it cancels out). So when should I be applying the reverse charge?

  • Simple case: Google sends us an invoice which explicitly tells us that there's no VAT and that we have to account for it ourselves
  • Complex case: we buy a book from America. Books in the UK are usually exempt, so do I do a reverse charge or code it as exempt?

@iteles can you take a look and see if you have anything to add / anything is unclear

[iteles]

This question we can cover as part of the work they do for us at year-end because they are dependent on this for them to be able to do their jobs right:

• What do I put in Xero for a purchase with IVA on it?

This question they have already answered for us: these are office costs and should be treated as such (we still need an answer on how to deal with IVA generally):

• My understanding is that the Portuguese construction work IVA wouldn't usually be reclaimed through HMRC as it's land related services. Is it usually possible to reclaim land-related services under the Portuguese system?

All others good, let's get an estimate from them before they start on how long it'll take.

[rub1e]

Thanks @iteles - I've amended the list based on the above. I've also added in Car hire and petrol, as that could be a fair bit of cash to reclaim if that's at all possible.

Have requested indicative costs for researching this, will update when they've replied

[rub1e]

Our accountants replied wanting £500 + VAT for this, and I don't think that's particularly reasonable

I've sent the list to Dan to send to FAC's accountant to see what they would charge, hopefully will be more reasonable

[iteles]

We would need to wait a few years to be able to recoup those costs in international VAT! Thanks for the update @rub1e

[iteles]

@rub1e As I come by larger invoices that are relevant here, I am editing the very top comment to add them (if we do end up claiming something, these are the ones we shouldn't forget!)

[rub1e]

Had a lovely response from FAC's accountant about this - he says at most £300 +VAT for this.

At that price we might not necessarily be able to make it all back in a reasonable amount of time (and actually the answer to that depends on the answer to our VAT questions!), but I do think this now looks like it's worth doing - because ultimately we do need this info if we're going to be as efficient as possible.

Thoughts @iteles?

[iteles]

Let's do it. Hopefully we can open source the info and save other people spending the money for information that should be easily found in the public domain.

Let's make sure we have a tight set of questions for them!

[rub1e]

I'm having a kickoff call with the accountant to understand precisely what outputs we're getting etc. on Thursday morning; will then formalise list of questions, and run it by @iteles before pushing the button.