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UK digital firms get support with new EU VAT rules

Press release -

UK digital firms get support with new EU VAT rules

Digital services sold to private EU consumers will, from tomorrow (1 January 2015), be taxed where the customer lives, rather than where the business is based, HM Revenue and Customs (HMRC) has reminded UK businesses.

The change to EU rules means affected businesses, which include most online digital services, must charge VAT on these supplies at the rate due in the customer’s EU country. UK businesses affected are being supported by HMRC as they get to grips with the change in the EU rules. For example:

  • businesses can register for the new VAT Mini One Stop Shop (MOSS) online service. This means that they will complete just one VAT return and make one payment every quarter, to cover all their EU digital sales to private consumers
  • businesses whose turnover is currently below the VAT registration threshold (£81,000 per year) will need only to register for VAT on their sales to private consumers in other EU member states. They will not need to charge VAT on any sales to UK customers
  • until 30 June 2015, micro-businesses that are below the current UK VAT registration threshold, and which register for the VAT MOSS online service, may base their ‘customer location’ VAT taxation and accounting decisions on information provided to them by their payment service provider. They do not need further information to be supplied directly by the customer.

Sally Beggs, Deputy Director Indirect Tax, said:

“We recognise this is a big change for businesses in general, and particularly for many micro-businesses. We have provided the business community with a lot of help and guidance and we will continue to support them, as well as monitor the impact of the changes.

“The VAT MOSS system means that digital services suppliers will not have to register for VAT (and provide a quarterly VAT return and payment) in every Member State where they do business, reducing the administrative burden of implementing these changes. Businesses that have their main operation or headquarters in the UK will register with HMRC to use the service.

“The UK has successfully pressed for a number of simplifications, which should help make operating the new rules easier, and the UK continues to argue the case for some form of cross-border threshold.”

Notes for editors

  1. More information on the VAT place of supply changes and the VAT Mini One Stop Shop - https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop
  2. The digital services affected include most types of broadcasting, telecommunications and e-service supplies. Examples range from telephone services, online dating, supplies of music, films and games to downloads of apps, images, texts or other information.
  3. To support UK micro-businesses, and to enable them to implement the 1 January 2015 VAT rule change, HMRC's view is that, until 30 June 2015 micro-businesses that are below the current UK VAT registration threshold, and who register for the VAT Mini-One Stop Shop (MOSS),  may base their 'customer location' VAT taxation and accounting decisions on information provided to them by their payment service provider. They do not need further information to be supplied directly by the customer. As payment service providers already collect and hold a minimum of two pieces of information about the Member State where the customer usually resides, this transitional period until 30 June 2015 will give micro-businesses more time to adapt their websites to meet the new data collection requirements.
  4. SMEs supplying digital services (broadcasting, telecommunications and e-services) that are currently not registered for VAT in the UK because they are below the VAT threshold will have to register for VAT to use the VAT MOSS online service. However, they can specify that the registration is only in respect of their sales to private consumers in other EU Member States. If they do not register for MOSS they will have to register for VAT (and put in a VAT return and payment each quarter) in each Member State in which they have private consumers
  5. See HMRC’s YouTube videos for information on a range of tax issues: https://www.youtube.com/user/HMRCgovuk
  6. Follow HMRC’s press office on Twitter @HMRCpressoffice
  7. HMRC’s flickr channel www.flickr.com/hmrcgovuk

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Issued by HM Revenue & Customs Press Office

HM Revenue & Customs (HMRC) is the UK’s tax authority.

HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.

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HM Revenue & Customs (HMRC) is the UK’s tax authority

HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.

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