Are non-sterling transaction fees subject to VAT?

Hi All,

I think the answer to this question is ‘yes - VAT is chargeable at the same rate as the goods or services supplied’, which I got from the website (regarding fees for card sales, as it relates to retailers).

However, I’m not sure if this applies to non-sterling transaction fees from credit card companies, especially as I’m listing the expense under the category ‘bank charges’, which aren’t normally subject to VAT. I’m confused…??

If anyone can clarify, that would be greatly appreciated.

Many thanks in advance

Hi Laney,

I’m afraid I’m no accountant, but I do know that bank charges are exempt from VAT. Whenever we have been charged non-sterling transaction fees by our bank, I have always regarded those as a bank charge and, therefore, exempt from VAT. I would guess non-sterling transaction fees charged in respect credit card transactions would fall within the same category. Hope this might help in some small way, although as I previously mentioned, I can’t categorically state that what I have advised you is accurate. One thing’s for certain, if you treat it the way I have suggested, you won’t be claiming back VAT from HMRC on non-sterling transaction fees, so HMRC are probably not going to penalise you if VAT does happen to apply.

Cheers Steve

Hi Steve,

Thanks for getting back to me, I really appreciate it!

You’re probably right, better to be safe than sorry. It’s such a small amount, but I really just wanted to be sure I was recording it correctly. I thought it would be a simple ‘ask Google’, but it’s unclear as I haven’t found anything that specifically relates to VAT and non-sterling transaction fees.

I posted an earlier question about how to record such expenses, but it hasn’t got a response. So I’ve listed both items (sale & fee) as shown on my credit card bill and simply attached the USD invoice. If there’s a problem, hopefully that’ll be enough to sort it out…

Thanks again for taking the time to answer!!

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