VAT charged on fees?

[Andiprobert]

The fees charged by Square - does this include VAT?

Thanks

Andi

[Breffni · Accepted solution]

Hi Andi, thanks for your post and welcome to the Seller Community. 

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.

I hope this helps @Andiprobert 

[irini]

Hello

Can you please confirm then that the Square fee includes UK VAT which is subject to reverse charge? I was not able to find this information anywhere on the website, only here on this forum. 

[Breffni]

Hi @irini, thanks for your post. 

Per the original response here "Squareup Europe Limited - our UK and FCA-authorised legal entity that provides a VAT-exempt supply of Payment Processing"

Any other questions about the reverse charges will need to be directed to the HMRC or an accountant. 

[irini]

you do not answer the question actually.  I need to know if embedded in the fee that we pay to Square there is a reverse charge VAT.  I know what reverse charge VAT is, we already declare other such charges to HMRC.  but Square need to tell us if this is the case with its fees (because some fees from other companies are not subject to VAT) so we can declare it to HMRC. you only mention it here, there is no official source on the website to confirm this.  I will need to ask an official member of the Square team to confirm it.