VAT and France

The supply of ‘assembled or installed goods’ for VAT purposes is when the contract with the customer requires that the goods are installed or assembled for them. Typically this will involve complex equipment that requires the assistance of the supplier to make it functional at a particular location - for example, installing studio recording equipment at a customer’s premises.

It would not matter if the assembly or installation work were a relatively minor element of the whole supply, as long as it was a contractual requirement. Nor would it matter if the supplier were to sub-contract the assembly or installation work to a third party.

In such cases, the country of supply for VAT purposes is where the installation or assembly of the goods is carried out. Goods that are transferred from France to the UK for the purpose of being installed or assembled in the UK are not treated as normal VAT imports, nor are they treated as transfers of own goods.

The UK allows a simplified procedure to operate, which can avoid the need for a French business to register for VAT in the UK solely due to installing or assembling goods in the UK, when these conditions are met:

• The French business is registered for TVA in France;
• The French business has no establishment in the UK; and
• The customer is registered for VAT in the UK.

Where any of the conditions are not met, the French supplier may need to register for UK VAT.

VAT position for a UK business

Where the French business is not registered for UK VAT, the UK business should account for it instead by including VAT in box 2 of its regular UK VAT return, at the appropriate UK VAT rate. It may then reclaim that same amount by including it as input VAT in box 4 of the same VAT return, subject to the normal rules about recovering input VAT. The value of the supply should also be included in boxes 7 and 9 of the UK VAT return. The UK business should receive an invoice that is endorsed with ‘section 14(2) VAT invoice’, and a copy of the written notification that the French supplier is required to make to HMRC about the supply.

Alternatively, where the French business does have a valid UK VAT registration and has correctly charged VAT on the invoice, this should be paid and the VAT reclaimed as normal.

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