If you’re buying Apple equipment for your business and you’re VAT registered, you’ll probably be keen to know which products Apple applies VAT to. In my experience, it’s a huge lottery.
Let me explain. Last month I bought an Apple MacBook Pro for my business. I didn’t buy it through Apple’s Business team, for reasons that are too tedious to go into, but it basically boils down to a problem with Apple’s systems. Nevertheless, Apple knew it was a business purchase, because during the order I entered my business’s VAT number so that it would generate a VAT receipt that I could use to reclaim the VAT.
Here’s how Apple applied VAT to the various purchases:
MacBook Pro – 20% VAT applied as expected
Trade-in of old MacBook Pro – no VAT applied
Apple Care+ warranty for the new MacBook Pro – no VAT applied
My accountant is surprised, to say the least, that no VAT is applied to the trade-in. I was also surprised that no VAT is charged for the warranty, as Apple is providing a service here in the UK for which it’s not charging VAT.
However, it seems there’s been some legal wrangling over the VAT status of extended warranties. According to this report by legal firm Simmons & Simmons, the European courts decided such products qualified as insurance and was thus exempt from VAT.
In short, take care to check precisely which products attract VAT and which don’t when you’re purchasing for a business, or you may find that the products/services you’ve bought work out to be more expensive than you first expected, because you can’t reclaim the VAT.
The problem is it’s often not clear at all from Apple’s website which products attract VAT and which don’t, so I suggest you have a conversation with Apple’s Business team before making purchases.