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TaxVince
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Category: UK Tax
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Experience:  Chartered Accountant >20 years + Qualified IFA
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Hi, I ran a business in booking artists/performers in Europe

Resolved Question:

Hi,

I ran a business in booking artists/performers in Europe and worldwide to come to United States to perform. Recently, I booked an artist in Germany and was asked to provide a VAT number (value added tax?) which I don't have so there's a 21% tax imposed on the invoice.

My business is based here in the United States, does it help to apply and obtain a VAT and avoid the 21% tax? How does the VAT works? If I pay the 21% tax and not have a VAT number, can i get it reimbursed in the United States or file it in my tax return. Please advise what are the best options?

Thanks
Submitted: 10 months ago.
Category: UK Tax
Expert:  TaxVince replied 10 months ago.

MamaTax :

Hi Thanks for posting the question. Should you find the answer below incomplete or you are not fully answered, please drop a reply before rating.

Expert:  TaxVince replied 10 months ago.
Im not particularly clear of what services that are provided but the VAT rules say that in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events (including fairs and exhibitions), VAT is charged in the country where the services are supplied ie where those events take place or admission to events will take place, regardless of where the person supplying the service or customers belong. Hence if your kind of services qualify for the above conditions, there should not be any VAT charged in the country of the musian but in the country where the gigs take place - ie US and in this case there is no VAT in US.



Therefore no VAT should be charged. If i were you i would ask the invoice issuer to reissue another invoice as you wont be able to claim VAT back in German nor in USA.


However this is often a complex area and if you are talking about a couple of thousands its worth hiring a VAT expert to have a detailed look into your case.


Regards

 

 

Customer: replied 10 months ago.

Hi,


 


We book artist in this case from Germany to sing at nightclubs in the United States. We are covering her ticket, food and lodging, etc. She's only charging us for her performance fee but her assist insist on asking for our VAT number. She provided her VAT number to us and said that since we don't have one, she needs to impose the 21% tax on top of the performance fee. What can i say or quote her to let her know we are not obligated to pay VAT?


 


 

Expert:  TaxVince replied 10 months ago.
Ok thanks for the reply.

I believe there shouldnt be any VAT charged as the supply of services is to a business customer, and according to EU VAT rules, the "place of supply" is where the business customer belongs, i.e. USA. This is categorized as outside the scope of EU VAT.

I advice you to contact the artist and quote the above. He should re-issue the invoice without VAT. Otherwise you wont recover that VAT from anyone.

Hope this helps.
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 961
Experience: Chartered Accountant >20 years + Qualified IFA
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