Generally, the place of supply of services (i.e. where VAT is due) falls under the General Rule. This states that the place of supply is where the customer belongs (for B2B supplies) or where the supplier belongs (for B2C supplies). The need to register in other EU Member States is averted though because for B2B supplies, the reverse charge is applied.

However, the place of supply of services connected to immovable property is where the property is located. This means those supplies would be subject to local VAT local in that specific country and hence there is a possibility of the supplier having to register for local VAT to meet its compliance obligations.

We have listed out below some examples of the services which are not subject to the General Rule but instead fall under the rule for immovable property:

  • Architects, surveyors or other professional services relating to a specific piece of immovable property;
  • Construction or installation services including maintenance, renovation or repair work;
  • Site supervision or security;y
  • Property management other than portfolio management of investments; and
  • Accommodation provided in the hotel sector

Therefore if a business provides the above services and there is a substantive link from them to an immovable property located in another EU Member State, it will need to consider if they have created an obligation to be registered in those Member States.

New Guidance

It had previously been the case that each Member State had its own interpretations on which services were connected to immovable property. This created some confusion for businesses and therefore, the EU published additional legislation in October 2013 to better define the services subject to this rule – however, this legislation only had effect from 1 January 2017.

The intention behind the legislation was to provide a more uniform approach to interpreting what immovable property is and specifying the proximity required for there to be a connection between the services and the property. To supplement these new rules, guidance was also published by the EU Commission in 2015 to help interpret further the new rules.

Interpreting the new rules

The new rules require businesses to review two questions to confirm whether a supply of services connected with immovable property is taking place:

  1. Does this service relate to property that can qualify as immovable property and, if so;
  2. Is there a sufficient connection between the service and immovable property to which it relates to qualify as a connected service?

If the answer is yes to both these questions, the the service is connected with immovable property. Having determined this point the business then needs to review what additional compliance and registration issues it has created in the Member State the property located.

We have provided some examples of this below.

Architect Services

Where an architect established in the UK provides a UK customer with his services for a property he is to have built in the UK, the supply is subject to UK VAT and the architect would charge UK VAT at 20%.

But what if the UK’s established architect’s customer has recently purchased some land in Spain and he has asked the architect to draw up plans specifically for this site? As the land is in Spain, the architect will be providing drawings that are connected to a property that will be built in Spain. Such an act is deemed to be a service connected with immovable property and hence the supply becomes subject to Spanish VAT. The architect will need to consider if he has to register for Spanish VAT and how he manages any related compliance obligations (i.e. VAT returns, other reports, etc).

Engineering or maintenance services

A French established supplier is engaged by a UK established business to undertake the maintenance, repair and inspection of machines and equipment that are ‘permanently’ fixed to the floor of its factory building in the UK.

First, it is important to confirm whether the machinery is fixed as this determines whether the services would be connected to immovable or movable property. If the latter is true then the services would fall under different VAT rules.

On the basis that the equipment is permanently fixed, the French customer may think he has created an obligation to register for VAT in the UK and charge UK VAT. However, as the supply is made in the UK by a non-established business to a UK VAT registered customer, there is no requirement to register as the UK business can account for the VAT on the supply under what is known as the ‘reverse-charge mechanism’.

The reverse charge is a mechanism whereby the recipient of the supply acts as though it has made and received the services and accounts for the VAT accordingly. Not all EU Member States operate this mechanism domestically, which adds to the complexity of doing business in the EU.


As can be seen from the two examples provided, there are many complexities within EU laws and regulations, especially when it comes to services connected with immovable property.

It is important to be aware of the VAT obligations for your business when you are providing these services, especially when the property is in a different EU Member State. With VAT rates as high as 27% in some EU countries, it can prove to be a costly mistake if your obligations are not known in advance and you become liable for this VAT due to the tax authorities.

Accordance has vast experience on providing advice in relation to services provided in the land and property sector and are always on hand to assist. This includes help with all registration and compliance obligations.