CHANGES to EU VAT rules are expected to earn the UK economy up to £2bn extra in VAT receipts over the next five years. The change, which comes in on 1 January 2015, affects the sale of digital services to private consumers and results in them being taxed in that local country. Who does it affect: businesses selling digital services to private consumers in other EU States. What does it mean to my business: no longer charging UK VAT and no longer accounting for these sales on the UK VAT return. Instead you will need to charge VAT at the local rate by either registering for VAT locall
CHANGES to EU VAT rules are expected to earn the UK economy up to £2bn extra in VAT receipts over the next five years. The change, which comes in on 1 January 2015, affects the sale of digital services to private consumers and results in them being taxed in that local country. Who does it affect: businesses selling digital services to private consumers in other EU States. What does it mean to my business: no longer charging UK VAT and no longer accounting for these sales on the UK VAT return. Instead you will need to charge VAT at the local rate by either registering for VAT locally or signing up for the new HMRC filing regime, MOSS (Mini One Stop Shop). What is a digital service: this is evolving all the time as VAT legislation finds it difficult to keep up with technology developments. At a high level it is as follows: * Broadcasting – TV or radio programs. * Telecommunication services – includes fixed and mobile calls and connection to the internet. * E-service – sales of apps, music downloads, e-books, online auctions, gaming, video on demand, provision of information, sale of advertising space and other downloaded applications. What should I do next: businesses should review their customer profiles and billing address and if an EU customer cannot provide an EU VAT number the business needs to get further advice about how to administer the scheme. What decisions should I be making: think about – * Your pricing strategy. VAT is as high as 27 per cent in some member states. * Invoicing requirements – these may need different fields adding. * Are you going to register in the different jurisdictions and apply local rules? * Are you going to register for MOSS? * Are your systems ready to cope with the changes? What is MOSS: an online system allowing UK businesses to declare and account for VAT due in other EU States. It is accessed by the HMRC portal. The changes come into effect 1 January 2015 and businesses can register for MOSS from 1 October 2014. Payments will be accepted electronically by the tax authorities and will be in Euros or the local currency. Alison Horner, VAT Partner said: “While these measures have been known for some time, it is time for businesses to take real notice and to start to put plans into place to be able to work within the new rules. It is good news for the Treasury but the impact on businesses will be time consuming and confusing at first.” For further information please contact Alison Horner on 01604 624011, email or visit www.macintyrehudson.co.uk
