Questions & Answers
The right way to charge the ultimate customers for VAT
Hi Nikhat,
How are you?
I read your reply on a VAT query and I hope I could get clarification on my confusion as well.
You see we are agents (in business set-up consultancy). Basically, we are dealing with another business set-up consultant rather than going directly with the authority, but we wish not to disclose this to our clients that we are dealing with another business set-up consultant.
Now, my question is that the other consultant charges VAT to us but the invoice is addressed to the ultimate customer name.
So my question is if I charge on top with what they charge, like if their PRO fee is AED 2,000 and, on my side, I charge PRO fee of AED 4,000, should I be charging VAT on the whole AED 4,000 or should I have to break it down and charge only on my top-up since this was not my supply?
Thank you!
Yes, VAT is payable on professional fees.
Indeed your professional fees to the client include the professional fees payable to the other agent but you need not to disclose the same to the client.
In your invoice to the client, mention your fees (which include the agent's share) and VAT separately (which includes Agent's VAT share).
When you receive the funds from the client, pay the other agent his fee plus VAT on his fee then he, in turn, will settle the same for his VAT returns and your company will pay VAT for your VAT share.
