Do we charge VAT for goods and services supplied in the UK, to a customer based in Germany?

We have invoiced a customer based in Germany for goods (equipment) and services (servicing / maintenance of the equipment) which have both been provided in the UK. The customer does not have a permanent establishment in the UK and is not VAT registered in the UK. The customer is saying we shouldn't have charged VAT, but I thought that 'place of supply' would dictate that we should. Should we be charging VAT to this customer? If not, should the invoices be zero-rated or outside the scope of VAT? Thanks, Martin

What do you mean "provided in the UK"? If the goods have not left the UK and the German customer is using those goods here in the UK, then you are correct to charge UK VAT (you'll have no proof of export as the goods never left the UK and so you cannot zero rate). If you mean your stock in the UK has been shipped abroad/shipped outside of the UK, then more likely the invoice should be zero rated as an export, as long as you hold proof of export/goods leaving the UK. The servicing/maintenance is a service (not a supply of goods) and that element would potentially be outside the scope of VAT, but depends on if the goods that are being serviced are outside of the UK and also whether this could be seen as a single contract of goods + maintenance or if it is two separate supplies of 1) goods and 2) services, often depends on the contract wording (ie, is the servicing optional or mandatory, etc).

Thanks for your response Jason. To clarify - the goods were shipped to the customer in the UK, and the customer will be using those goods in the UK. The service / maintenance agreement is separate to the supply of goods....and of course we are servicing those goods in the UK. Based on this, I assume we are correct to charge VAT on the goods. What about the servicing / maintenance?

Hi,
If you supply goods and the goods remain the in the UK then the Place of Supply of the goods will be in the UK and so UK VAT will need to be charged.
The goods can only be zero rated if the goods are exported.
Please see the guidance below:
Conditions and time limits for zero rating
However if you are providing services upon the goods like maintenance/repairs then this would be a service and the Place of Supply would then be determined by where the customer belongs.
So if the business customer is in Germany then the supply of services would be Outside The Scope of VAT.
Please see the guidance below:
Services supplied ‘where performed
Thank you.