Question asked by Natalie Collinson 4 years ago
Hello. I've recently subscribed to a website for some simple business graphics.
Their invoice comes from an Australian Pty Ltd address and includes their tax at 20%.
Am I thinking I reconcile this as:
Hi Natalie,
This is correct. Having said this. As you are UK based they should not apply VAT to your invoice to my knowledge and I would advise speaking with an accountant in regards to this.
All the best,
Mohamed.
Best answerHello Mohamed,
Thank you for your prompt reply. They haven't applied VAT specifically.
The invoices just states "Includes Tax" on a separate line which calculates at 20%
After some more digging, I have found...
Canva as an Australian company Keep your country of registration updated to ensure you are paid and taxed correctly. As an Australian company, Canva withholds royalty tax according to Australian law. The percentage of this tax is based on your country of residence. It differs from country to country, and is affected by any bilateral tax agreement with your country. See Income Tax Treaties for the list.
In many cases, any tax you’ve paid this way can be claimed as a foreign tax credit when filing your own tax return. So we advise checking your local requirements on foreign tax claims.
Australian tax year After the end of each Australian tax year (1 June - July 30), Canva sends a Withholding Tax Statement, which summarises your gross earnings and tax withheld.
You may be able to claim credits for taxes withheld from your country’s tax authorities. We advise speaking to a tax professional in your country of residence regarding this. Countries without tax treaties may not recognise tax withholdings.
So I'm guessing, that I process as per above - no vat to be reclaimed - then once per year, I'll process a VAT refund claim based on their annual summary. I'm beginning to think the hassle is not worth the subscription!
Hi Natalie,
I would definitely advise speaking to a tax professional as per their terms.
All the best,
Mohamed.
Withholding tax is deducted from income due to a UK company for sales etc to a few foreign jurisdictions mainly B2C - it can be claimed as a set off in your annual tax claim where there is a double taxation agreement between the UK and the foreign jurisdiction.
VAT is a charge on domestic sales - If you buy products/srvices from a foreign supplier they are exporting their product/services outside of the domestic market and therefore there should be NO question of VAT or GST on your purchase until it is imported into the UK
Your question seems to suggest you are buying an electronic service - which should NOT involve any VAT if it is an AUS to UK transaction - check whether your invoice has a VAT/GST Registration number - if the invoice specifically identifies a VAT/GST amount then you need to contact the company and ask them to refund any VAT/GST as they have charged that in error. You cannot claim any foreign VAT paid via your UK VAT return
Other than that your CB treatment is normally the correct one
You must 