Rule Change - VAT on supplying digital services

Posted on: 29th December 2014 at 00:00
Posted by: PANDA
Discipline: Other

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EU VAT place of supply of services will change. This will affect the sales of digital services (broadcasting, telecommunications and e-services) from a business to a consumer (private individuals and non-business entities eg, public authorities or charitable bodies). The place of taxation will be determined by the location of the consumer.

Where digital services are supplied on a business to consumer basis, the supplier is responsible for accounting for VAT on the supply:

  • to the tax authority
  • at the VAT rate applicable

in the consumer’s EU member states with lower rates of VAT.

Scope of rule change

The new rules only apply where a UK business meets all of the following criteria:

  • supplies digital services from the UK to another EU member state
  • charges for that supply (digital services provided free of charge are outside the scope of VAT)

Businesses outside the EU member state are also affected by the changes. 

Businesses that are not affected do not need to take further action. 

You can check if you are affected by using the VAT MOSS flowchart (link in left hand menu).

UK micro-businesses that are below the current UK VAT registration threshold, and who register for the VAT Mini One Stop Shop (MOSS) may, until 30 June 2015, base their ‘customer location’ VAT taxation and accounting decisions on information provided to them by their payment service provider. This means the business need not require further information to be supplied by the customer. As payment service providers already collect and hold a minimum of 2 pieces of information about the member state where the customer usually resides, the transitional period, until 30 June 2015, will give micro-businesses additional time to adapt their websites to meet the new data collection requirements.
PANDA will identify relevant information and training on this area to help our members in the New Year if we feel there is sufficient demand so if you are concerned or would like to attend a seminar to help you navigate this area please contact us immediately: info@panda-arts.org.uk