When offering recruitment services to international clients, it’s important to determine your VAT implications. VAT exemption and being ‘out of scope’ refer to different aspects of VAT regulations:
VAT Exemption: This typically applies to specific goods and services within a country, often related to health, education, and finance. Recruitment services generally do not fall into these categories and are not exempt from VAT based on the type of service.
Out of Scope: This refers to transactions that lie outside the remit of VAT regulations, often due to the nature or location of the transaction. Generally, providing services to clients outside your country could be ‘out of scope’ for VAT purposes. However, this depends on the VAT laws of your specific region.
For instance, in the European Union, if you are a VAT-registered business offering services to clients outside the EU, these services could be regarded as ‘outside the scope’ of EU VAT. Therefore, you might not charge VAT, but you should report these sales on your VAT return as zero-rated EU sales.
To ensure compliance, check the specific VAT regulations in your country or region. Consulting with a tax advisor familiar with international transactions can provide clarity on how these regulations apply to your situation.