EU Sales and 90K VAT Threshold

Subject: Clarification on VAT Registration and Revenue Threshold

Hi everyone,

My business is nearing the £90k VAT threshold, and my accountant has recommended that I register for VAT. However, as a legal marketing consultant, over half of my income has come from law firms located overseas. From what I’ve read, it seems that B2B international services are not included in the threshold calculation.

I wanted to clarify this since my accountant seems to have a different perspective. Any insights would be appreciated!

*I apologize for mentioning the EU in the title—some of my revenue also comes from the MEA and APAC regions, but I’m not sure if that makes a difference. Thank you!

1 Comment

  1. bdadmin

    Reply

    It’s great that you’re being proactive about VAT registration as your business approaches the threshold. Your understanding is mostly correct: in the EU, when it comes to B2B services, revenue from international clients typically does not count toward the VAT registration threshold.

    According to EU VAT rules, services provided to businesses (B2B) located outside the EU are generally treated as outside the scope of EU VAT, which means they wouldn’t count in your threshold calculation. This applies to clients from both the MEA (Middle East and Africa) and APAC (Asia-Pacific) regions as well.

    However, there are some nuances to consider, such as where your services are deemed to be supplied and the exact nature of your clients. It’s always best to confirm with a tax advisor familiar with the VAT rules applicable to your specific circumstances, especially if your business model involves multiple jurisdictions.

    If your accountant is suggesting that you should register regardless, it could be worth asking for clarification on their reasoning. There might be additional considerations at play, like potential domestic clients or specific services that could be treated differently.

    In any case, keep good records of all your international sales, as they may be relevant in the event that tax authorities want to review your VAT obligations. Good luck with your business!

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