VAT rules for a small business based outside of the UK

Hello, I have spent many hours trying to figure out the rules but I still can't quite make sense of how it works: I have started a small business for digital marketing services in Germany. This means I do not need to pay VAT there because I make way less than 20.000€ per year. Now I would like to take on a client (also a business) in the UK. I still only work from Germany. Does this mean I need to register for VAT and pay VAT even if i make less than, for example, 1.000 pounds? If i have to do that does that mean i put a 0% VAT charge on the invoice and then handle VAT myself? I can not use the Reverse Charge Method (since Brexit)? I have read a lot of contradicting information on this topic and hope someone here can help.

Hi,

You would normally only register for VAT in the UK if you are making supplies here which are over the £85000 threshold. However, if you are a non established trader, that is, have no esablishemt in the UK then you would need to register immediately in the UK if you are making digital supplies to consumers in the UK as there would be no threshold to consider.

However, if you are making digital supplies to a UK based business from Germany then this would be accountable under the reverse charge procedure by the UK business and so there would be no requirement to register for VAT in the UK.

You can see guidance here:

Reverse charge

Working out whether you need to register

Non-established-taxable-persons (NETPs) — basic information

Thank you.

How to determine whether your customer is a business (taxable person) or is a private consumer If you supply digital services and your customer does not give you a VAT registration number, you should: treat it as a business-to-consumer supply charge the VAT (or equivalent) due in the customer’s country If a customer cannot supply a VAT registration number but claims they’re in business but not VAT registered because, for example, they’re below their country’s VAT registration threshold, you can accept other evidence of your customer’s business status. For example, a link to the customer’s business website or other commercial documents. It’s your decision whether to accept alternative evidence that the customer is in business and your customer cannot ask you to treat a supply as business-to-business if they have not given a valid VAT registration number. If you accept that your customer is in business, the supply does not come within the scope of these business-to-consumer arrangements. With a cross-border business-to-business supply the customer will be responsible for accounting for any VAT due to the tax authorities in their country. See : https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers#businessorconsumer