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Forum Discussion
Why is Dropbox charging Irish VAT to UK customers?
The UK left the EU to all intents and purposes on 1 January 2021.
Businesses providing digital services to Britain from outside Britain are obliged to register for British VAT from that date and their invoices should show a British VAT number: "If you’re selling digital services from the EU to the UK you will need to register and account for VAT." from paragraph 2.5 on https://www.gov.uk/government/publications/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021/accounting-for-vat-on-services-between-the-uk-and-eu-member-states-from-1-january-2021
A search shows that Irish VAT is not applicable to supplies such as these outside the EU, because the place of supply is considered to be where the service is used (not supplied). British VAT is probably applicable, in which cases a British VAT number should be quoted on Dropbox invoices.
Dropbox should supply a VAT invoice with a British VAT number on it. The Irish VAT invoice is incorrect. This would mean that the VAT is payable to the British government (and reclaimable if the customer is VAT registered in Britain).
Please can anyone explain why Dropbox invoices charge Irish VAT?
Many thanks.
- Megan
Dropbox Staff
Hi Richard T.21, let's see what we can find together!
Since this would require some account specific info, do you mind if I reach out to your Community email?
I'd be happy to have a look into this with you, and see how we can go on about it.
Keep me posted.Thank you for your reply.
I don't think this has much to do with account specifics at all - it's pretty general - but if you want to reach out to me, please feel free. Please could you confirm whether or not you work for Dropbox for me?
Just for clarity: I am in the UK (England, in fact - the address Dropbox has on file says that, too). Dropbox invoices come from an Irish-based company (Dropbox International Unlimited Company) at a Dublin address, charge VAT, and have an Irish VAT number on them (and not a British one). You have charged in GBP.
Do you generally charge Irish VAT to British customers, and provide invoices to British customers with Irish VAT numbers on them? If you can answer that particular question for me, I can decide how to take the matter further with you. To me, it looks like Dropbox is not correctly operating VAT (per UK VAT regulations, and based primarily on an invoice Dropbox raised in the last few days), but I am happy to be proved wrong.
- Mark
Super User II
Part of this is a large VAT issue that the whole EU put in (the UK did it before the EU). Part of this legislation was to start charging VAT dependent upon where you buy - so things like Alibaba now do the same when you buy.
See https://www.citizensinformation.ie/en/money_and_tax/tax/duties_and_vat/value_added_tax.html. for some more info.
It is not up to Dropbox to decide whether a plus account is used for business or personal purposes, thus it is not up to them to decide whether or not to charge VAT. Is there a regulator in Ireland or EU-wide to whom this can be reported?
I think the matter shoulkd be taken up with HMRC in the UK. Dropbox appear not to be properly accounting for VAT on their services provided in the UK (unless, their sales turnover falls short of the VAT threshold). The Irish authorities probably couldn't give two hoots as, presuming Dropbox account to them for the VAT they have collected, they are making money when the nature of the export says they shouldn't be.
