Services of agents and intermediaries

An agent (intermediary) for Value-Added Tax (VAT) purposes can either be disclosed or undisclosed. A disclosed agent acts in the name of, and on behalf of, another person (the principal). An undisclosed agent acts in their own name, but on behalf of the principal. 

It will be a matter of fact as to whether you are a disclosed or an undisclosed agent.

Disclosed agent

An agent who acts on behalf of another person (the principal), and who discloses this fact to the end customer, is a disclosed agent.

The principal supplies the goods and services directly to the customer. The principal is the accountable person in respect of the VAT on the sale of the goods or services and raises the invoice to the customer for the supply.

The agent is liable to VAT on the service he or she renders to the principal (commission payments). The agent therefore raises his or her invoice to the principal.

The place of supply of services to non-taxable persons by a disclosed agent is the place where the underlying transaction is supplied.

The place of supply of services to taxable persons by a disclosed agent is the place where that taxable person is established.

Undisclosed agent

An undisclosed agent is someone who acts on behalf of another while holding himself or herself out as principal. Where the person acts as an undisclosed agent in relation to the sale of goods or services, the supply is regarded as a simultaneous supply to and by the agent.

The agent will be regarded as receiving services or goods from that other person and supplying them to the final customer.

The agent will charge VAT on the supply of services in the normal way. The agent is liable to account for VAT on the goods or services deemed to be supplied by him or her to the customer.

The agent therefore raises a VAT invoice for the goods or services supplied by him or her. The commission that the undisclosed agent earns is embedded in the price that he or she sells the goods or services for and the VAT rate applicable to that commission is the same VAT rate which applies to the goods or services supplied.

The principal is liable to VAT on the goods or services supplied to the agent. The principal raises an invoice to the agent for the supply, and not to the customer.