VAT on services from abroad

VAT must be calculated when importing services from abroad. Such purchases are usually tax deductible if certain conditions are met, among other things, the service is usually liable for tax when sold domestically and the service must be supplied from a remote location (executed at one location and delivered to another). Read more about the tax deduction conditions at www.hmrc.gov.uk (external link).

Both the basis for calculation and estimated tax on such purchases must be reported on the tax return. Any deductible fee may be deducted from the input taxes.

When posting the purchase of services from abroad within Mamut Business Software, the VAT codes Import services within the EU, or Import services, outside the EU must be used. These are by default selected as deductible. Read more about VAT on services from abroad in Quarterly reports, EU, account (ECSL).

Tip! If you enter purchases via the Purchase module, it is also important that you have selected Import from EU/from outside EU in the VAT settings for the supplier. This will result in the correct VAT codes being automatically selected on the product line. The settings can be found via View - Contacts - Contact Management. Then select the relevant supplier, go to the Settings tab and click the Supplier button and then choose the correct alternative in the VAT drop-down list.

Purchase of non-deductible services from abroad

If you want to buy services from abroad that are not deductible, you must change the settings for the relevant VAT codes (Import services within the EU, and/or Import services, outside the EU). If your business purchases both deductible and non-deductible services from abroad, you can alternatively copy the VAT code(s) and change the setting for the copied VAT codes so that you have a VAT code for each of the service types. Read more about how to duplicate a VAT code in Editing the VAT codes.

How to change the settings for the VAT codes

Go to View - Settings - Company - VAT Register.
Select the relevant VAT code and click Edit.
Select the Foreign service tab, and then select the radio button Non-deductible.
Click OK.

The VAT code can now be used to enter purchases for Non-deductible services from abroad.