What are EC Services?
Definition of EC Services
EC Services are services that a UK business supplies to customers in the wider EU, outside the UK. The same term might also be used for services that a UK business buys in from the wider EU.
EC stands for the European Commission.
UK businesses that are registered for VAT and supplying services must identify whether they are making sales to businesses or consumers in the wider EU.
Sales of services to businesses in the wider EU are usually outside the scope of UK VAT, because the customer will account for VAT.
Sales of services to consumers in the wider EU are subject to UK VAT in the same way as sales to UK customers would be.
The rules are changing for certain services supplied to consumers from 1st January 2015, which will be subject to VAT at the local rate where the customer is.
If you buy in services from businesses who are based outside the UK, you need to record VAT on these services under the 'reverse charge' mechanism. This doesn't result in extra VAT to pay or reclaim.
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FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.