Squareup International Ltd. - Risk Management and IP License Fee (Taxable)

[DebsT]

The Square info says that the only fees are transaction fees but I have been paying a monthly licence fee listed as "Squareup International Ltd. - Risk Management and IP License Fee (Taxable)" It works out to be a significant portion of my fees. can someone please explain why this is and if it is correct. I am in the Uk, I use only cards registered in the Uk, in person by PIN or contactless.

[Breffni · Accepted solution]

Hi @DebsT, thanks for flagging this and welcome to the Community. 

I appreciate the terminology and breakdown of the fees can be confusing. I'll leave some information which I hope helps clarify this for you and anyone else with the same query. 

Of the fees set out in our Fee Schedule, Payment Services Fees account for 1.1% of each transaction with the remainder of the fees being SaaS (Software as a Service) Fees.

The total fee charged to you by Square is broken down into two parts, from two entities:

1. Squareup Europe Limited - our UK and FCA authorised legal entity that provides a VAT exempt supply of Payment Processing; and
2. Squareup International Limited - an Irish entity that provides a zero-rated (0%) supply of Risk Management, IP Licensing and other software services, or “SaaS Fees” as mentioned on our Fee Schedule. For this portion of the fee, if you are VAT registered in the UK, you can self-account for UK VAT under the reverse charge mechanism. This should be quoted at the bottom of our invoice with the narrative “Reverse Charge Notice: Under Article 44 and 196 of the EU VAT Directive, the place of supply is where the recipient is located”.

Here’s a link to the UK tax authority HMRC website explaining the rules for reverse charge VAT.