There are changes coming to VAT charges to clients in Europe.
Do you supply Electronically Supplied Services i.e.
- Electronically supplied services for this purpose are Digital services essentially means broadcasting, telecoms and e-services including those selling apps, e-books, streaming services (e.g. sports/film/TV/music), dating services and journals, newspapers and magazines that are subscribed to electronically and smartphone games.
- NO? Then you don't need to read further
- YES? Then regrettably you need to read on to discover what is in store but do contact Allan Frost
It is only B2C (Business to Consumer) that is affected by the new changes because for a B2B (Business to Business) business as long as the customer gives a VRN (Vat Registration Number) no charge is made for Vat as it is accounted for by the customer in his own country by way of the Reverse Charge Mechanism. The main change is now that Vat is charged at the rate prevailing in the country the customer is resident in rather than the rate in the country where the supplier is resident
The EU is bringing in new rules from 1 January 2015, which cover electronically supplied services:
- Digital services essentially means broadcasting, telecoms and e-services including those selling apps, e-books, streaming services (e.g. sports/film/TV/music), dating services and journals, newspapers and magazines that are subscribed to electronically and smartphone games.
- Supplied to customers i.e. B2C
- Resident in the EU
The general idea is that if you are caught by the new rules, you can make a single return which will cover all your non-UK VAT. This is entirely separate from the UK VAT return, and has its own deadlines, payment dates, and so on.
Place of supply
The main change is that the place of supply becomes the country the customer is resident in - this is the exception from the general B2C rule, which is that supplies are made where the supplier is.
The secondary change is that there is a new system (the Mini One-Stop Shop) for making VAT returns where you have such customers across the EU. This should simplify matters in most cases, but may be complex in unusual ones.
Areas of concern
You will need to be VAT-registered to use the MOSS. There is a suggestion that the rules may quickly change so that only your EU sales are subject to VAT but NOT your UK sales. There is no registration threshold for overseas supplies, so an unregistered UK company with a single overseas customer would need either to:
- register in the UK to use the MOSS; or
- register where the customer is
Obviously neither of these is ideal.
Registering for MOSS
This has to be done by the business: although the actual return can be handled by us if we are your agent. It can be done as an add-on to VAT on-line, and we can then act as your agent to use MOSS when you are registered.
If you are caught by these changes do not worry just contact Allan Frost who will take sort things out for you. Allan's e-mail address is: allan.Frost@marchmututal.com.