Posted by admin - November 11, 2014 8:55 am VAT on electronic services and registering for MOSS

What you need to know

The VAT place of supply rules for supplies of electronic services are changing from 1 January 2015. The change affects business to customer (B2C) supplies within the EU of telecommunication services, broadcasting services and e-services.

From 1 January 2015 the place of supply for these services will be the country where the customer belongs – such supplies currently being taxed in the country in which the business is established. This means that UK businesses supplying electronic services to non-business customers in other EU member states will have to charge and account for VAT according to the local VAT rules of the customer’s member state.

Registering for VAT

Affected UK businesses will need to register for VAT in each EU member state in which they supply such services as there is no VAT threshold applicable to these services. Alternatively they can register for the Mini One Stop Shop (MOSS) system. This will enable an affected business to submit one quarterly return and payment to HMRC to account for the overseas VAT charged to customers in all other EU member states. Registration is now available online.

So what is an “e-service”?

Live webinars are excluded but if the webinar is recorded and then supplied as a video, that is treated as the supply of a digital service. Automated distance learning packages are also caught as are supplies of learning materials, generally, sold over the internet.

Clearly suppliers of such services will need to ensure that they are able to identify the location of their customer and that their pricing structure reflects the VAT rate applicable to the country in which their customer resides. This may involve a substantial rewrite of the website through which the service is provided.

Nobody is quite sure yet how this will be policed but for more information or advice on how to proceed with MOSS please speak with your usual MFW contact.