A. Services of a professional nature provided to a non-EC resident are deemed to be supplied where the recipient belongs (paragraph 16(2) Schedule 4A VAT Act 1994). As such the services are treated as outside the scope of UK VAT, as the rental property itself does not create a place of belonging for the owner. So no VAT should be charged.
This is in contrast to services which are directly related to land (paragraph 1(1) Schedule 4A) such as those of a property managing agent. Here the place of supply is deemed to be where the specific land or property is situated, hence your clients are correctly charged VAT.
The situation is slightly less clear for professional services supplied to an EC resident with UK property rental income. This particular scenario is not directly clarified in HMRC’s published guidance, however, we would argue that as property letting is a business activity for VAT purposes, the services should be treated as business to business under the general rule and therefore supplied in the Member State where the landlord belongs and outside the scope of UK VAT.
If you have a query on VAT on international services, why not contact the VAT Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.
