We provide consultancy to a client in Germany. Can we zero-rate our invoice?

receive a zero-rated supply where they create a إن أنشأ تواجدًا في الدولة بصورة مؤقتة وقت تأدية الخدمة temporary presence in the UAE at the time the ، فعلى سبيل المثال.وكان التواجد مرتبطًا بالتوريد المقدم services are performed, which relates to the supply عندما يقوم متلقٍ غير مقيم لخدمات قانونية تتعلق بإجراءات being made. For example, where a non-resident ، تحكيم بإرسال ممثل عنه إلى الدولة لحضور جلسات التحكيم recipient of legal services relating to some فلن يكون باستطاعة مكتب المحاماة الذي يورد الخدمة تطبيق arbitration sends its representative to the UAE to نسبة الصفر على الخدمات المرتبطة بإجراءات التحكيم التي be present during the hearing, the law firm making نظرا ً لكون المتلقي- تواجد العميل أثناء تأديتها داخل الدولة the supply would not be able to zero-rate the غير المقيم يعتبر متواجدا ً فعليا ً في الدولة من خالل ممثله supply of the services relating to the arbitration .وقت تأدية الخدمات من قبل مكتب المحاماة process during which the client was present in the UAE – since the non-resident client, through its representative, was physically present in the UAE at the time the services were performed by the law firm. The above principles relate to companies and other وتتعلق المبادئ المذكورة أعاله بالشركات والكيانات األخرى entities, which are capable of being established ،التي يكون بإمكانها التواجد في أماكن متعددة في آن واحد and present in multiple locations simultaneously, وال تنطبق على األشخاص الطبيعيين الذين ليس بإمكانهم and do not apply to natural persons who are إذا تواجد، ولذلك.التواجد في أكثر من مكان في آن واحد incapable of having a simultaneous presence in فال يمكن أن يكون "خارج،الشخص فعليا ً داخل الدولة multiple locations. Therefore, where an individual إن هذا التواجد للشخص داخل الدولة وقت تأدية."الدولة is physically inside the UAE, he or she cannot be الخدمات سيحول دون تمكين المورد من تطبيق نسبة الصفر “outside the State”. This presence of the individual .على التوريد المقدم إلى هذا الشخص in the UAE at the time the services are performed would typically take away the ability of the supplier to zero-rate the supply to the individual. It should be noted that Article 31(2) of the ) من الالئحة31( ) من المادة2( ويجب التنويه أن البند Executive Regulation provides a special extension التنفيذية يتضمن توسعًا خا صً ا في تعريف عبارة "خارج to the meaning of the term “outside the State”. . فيما يلي شرح لهذا التوسع الخاص."الدولة This is discussed below. Page 9 of 11

VAT treatment of agency services Where an agent is charging an agency fee or commission for its agency services, these agency services should be treated as a separate supply of services from the supply of the underlying goods or services. Where the place of supply of such agency services is in the UAE, the services are considered a taxable supply. It should be noted that the place of supply for agency services provided by agents must be determined independently from the place of supply of the underlying goods and services, and therefore can differ from the place of supply of such goods or services. For example, where a UAE agent provides agency services to a UAE supplier of electronic services which have a place of supply in the USA under the use and enjoyment rules, the place of supply of the agency services would still be in the UAE. The default VAT rate for a taxable supply of agency services in the UAE is 5%. However, in certain situations, the services may be zero-rated where they are supplied to a non-resident principal.32 For zero-rating to apply, the following conditions must be met: • • • the agency services are supplied to a recipient who does not have a place of residence in the UAE or any Implementing State and who is outside the UAE at the time the services are performed; the agency services are not supplied directly in connection with any real estate or goods situated in the UAE at the time the services are performed; and the performance of the agency services is not received by another person in the UAE who is unable to recover any input tax in full.33 The application of this zero-rating provision must be determined by reference to the specific services provided by the agent. For example, while agency services relating to the provision of an electronic platform to allow a principal to sell goods or services in the UAE may be eligible to be zero-rated, a service of physically handling and delivering goods would not be eligible for zero-rating since they would be directly in connection with the goods in the UAE. It should be noted that where an agent does not charge a fee or commission for its services, VAT would not be applicable on the services. 5.3.2. Undisclosed agency In accordance with Article 9(2) of the Decree-Law, a supply of goods and services through an agent acting in its name, i.e. through an undisclosed agent, is considered to be a direct supply by the agent and for his benefit. Where an undisclosed agent is involved in a supply of any goods or services, there are two simultaneous supplies of these goods or services for VAT purposes – a supply 32 33 Article 31(1)(a) of the Executive Regulation. Article 31(3) of the Executive Regulation. 27