VAT on overseas expenses when billed through UK Client

Hi, I have two scenarios and just need a bit of clarification please. Services are supplied to a company in Europe/rest of the world through a contract with a UK client. Expenses are also paid for by the UK company. VAT is charged on both the income and the UK expenses. Another overseas company pays a daily subsistence rate rather than actual expenses. Again, this is invoiced to the UK Client. Question 1: Should VAT also be added to the overseas expenses (actuals), some of which include VAT, which would have been paid locally (e.g. in Germany)? The UK company asks that the overseas expenses be billed separately to them and they reclaim these directly from the overseas company. Question 2: Should VAT be added to the billing/invoicing for daily subsistence? Services are also supplied B2B directly with overseas clients, so fall outside the scope of VAT. No VAT is therefore added to any expenses incurred either in the UK or overseas when billed to these clients. Is this correct? Thank you

Hi,

If you are providing a service to an overseas company which is outside the scope of VAT then any other expenses billed to the overseas company should be billed at the same rate of VAT as a single supply and so would also be outside the scope of VAT.
If you are billing a UK company for a supply of services overseas then it is important to work out who is your customer for this supply, as the place of belonging of the customer will determine whether or not you have to charge VAT.
If the customer is in the UK then VAT would be charged on the supply, expenses and so on. You can see the guidance below:

The place of supply rules for services

Place of belonging

Thank you.