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.”