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Posted Thu, 04 Nov 2021 17:08:28 GMT by Rik
Hi, I'm a sole trader, no VAT registered, and I buy web hosting overseas. The overseas provider (italian) has stopped adding 22% VAT to his invoices. How do I account these invoices? Simply by the total or applying the reverse charge adding the UK 20%? Kind regards, Riccardo
Posted Mon, 08 Nov 2021 09:51:06 GMT by HMRC Admin 18

As your business is in the UK the Italian company are correct in not charging you Italian vat as the place of the supply of the service is deemed to be where you,the customer, belong. So if you are not vat registered there would be nothing for you to do, however the cost of their service to you would must be added to the value of your own taxable supplies when determining whether you should be registered for UK VAT. I have attached link to guidance, have a look at section  5.7:

Place of supply of services (VAT Notice 741A)

Thank you.

Posted Mon, 08 Nov 2021 11:05:03 GMT by Rik
Thanks for your reply. I'm not sure I've got it 100% though. From your reply I understand: 1) I don't have to apply the reverse charge. 2) however, I get confused from the phrase "your own taxable supplies". You mean that threashold-wise, I have to add the purchase invoices from the italian supplier to my turnover and if such sum exceeds £85000 I have to register for VAT? Example: I have a turnover of 70000. I buy hosting from Italy (for reselling purposes) for 20000. I have to register for VAT because selling invoices + purchase invoices exceed 85000. Did I understand it right? Kind regards,
Posted Mon, 08 Nov 2021 15:34:00 GMT by HMRC Admin 17

Yes you understand this correctly.

The supplies from the Italian supplier will need to be added to your own turnover when deciding whether you need to register for vat.

The example you gave is also correct.

Posted Mon, 08 Nov 2021 16:02:22 GMT by Rik
Thanks a lot, very helpful! Kind regards.

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