Digital services suppliers urged to register for new EU VAT service

Businesses supplying digital services across the European Union will be able to register for a new online VAT service from 20 October.

This will mean that they do not have to register VAT separately in each country where they do business.

To help the estimated 34,000 or so small-to-medium-sized enterprises (SMEs) affected by the changes, HM Revenue and Customs (HMRC) has released a short YouTube video: http://youtu.be/cZdDIVNaL18

The digital services affected include most types of broadcasting, telecommunications and e-service supplies. Examples range from telephone services, supplies of music, films and games to downloads of apps, images, text or other information.

From 1 January 2015 the place of supply, and therefore taxation, of EU business-to-consumer supplies of digital services is changing. Currently the place of taxation is where the supplier is established, but from January it will be where the consumer lives.

On 1 January all EU Member States will also implement the VAT Mini One Stop Shop (VAT MOSS), to avoid additional administrative burdens and costs if a business is required to register for VAT in every Member State where it has consumers.

Sally Beggs, Deputy Director, Indirect Tax, HMRC, said:

“The VAT MOSS will save digital services suppliers from having to register for VAT in every Member State where they do business, removing a significant administrative burden. Businesses with their main operation or headquarters in the UK will register with HMRC to use the service.”

Between 27,000 and 42,000 UK businesses are expected to register for VAT MOSS in the UK.

While they will be able to register from 20 October 2014, the service will start operating from 1 January.

Notes for editors

1.  More information on the VAT place of supply changes and the VAT Mini One Stop Shop - www.hmrc.gov.uk/posmoss 

2.  See HMRC’s YouTube videos for information on a range of tax issues:  https://www.youtube.com/user/HMRCgovuk

3.  SMEs supplying digital services (broadcasting, telecommunications and e-services), which are currently not registered for VAT in the UK because they are below the threshold, will have to register for VAT to allow them to use the VAT MOSS online service. If they do not register for VAT in the UK, they will not be able to use VAT MOSS and will have to register for VAT in each Member State in which they have non-business customers.

4.  Follow HMRC’s press office on Twitter @HMRCpressoffice

5.  HMRC’s flickr channel www.flickr.com/hmrcgovuk