VAT Charged by UK supplier to UK Company but service was in AUS

Hi, A UK company undertook a service for our Australia branch. The place of service was in AUS. The supplier has charged 20% VAT on the invoice to our UK company (customer) for the services. Should the services be exempt from VAT so zero % VAT charged on the service. Regards,

Place of supply of services is usually where the customer is. So if you (a UK entity) have engaged with a UK supplier to supply services in Australia, the suppliers customer is you, in the UK (the suppliers customer is not Australia unless the supplier is contracted to and invoicing Australia). So the supplier is correct in charging UK VAT as their customer is you in the UK. Had the supplier contracted directly with the branch in Australia then it would be a UK supplier selling to a non-UK customer and that would have be outside the scope of VAT.

Hi,

What determines the place of supply of the service is where the business customer belongs. This means that the supply is deemed to take place in the UK even though the service was carried out overseas. You can see the guidance below:

The place of supply rules for services

Thank you.