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VAT on electronic services


paulears

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Not sure if anyone here supplies electronic services via the net or email, but the VAT rules are changing.

 

info here

 

EU BUSINESSES supplying:

1. Business in another EU country - No VAT charged. Customer must account for the tax (reverse-charge mechanism).

2. Consumer in another EU country - You must charge VAT in the EU country where the customer belongs (not where the business is based).

 

If you read the extremely complicated rules it's based around a Member One Stop Shop - and seems to mean that even when somebody is NOT registered for VAT here, they must still register in the country a person downloading your material lives in!

Under the Union scheme, a taxable person is a business (be it a company, a partnership or a sole proprietor) which has established its business or has a fixed establishment in the territory of the EU

My God this is complicated. I run from one of my servers a download site for specialist downloadable products - for a client of mine. The material is hosted on my site, but he receives the payments direct, and I take a slice for running it. At present, I simply get the total number and value of the downloads, but only he has access to the Paypal account - so I don't see where people actually live, and have not really been that bothered.

 

As it seems to apply to anything delivered electronically, it would seem to apply to anything - documents, images, music, video etc that is delivered electronically rather than physically.

 

I don't think it will impact me that much, but the scheme is being explained as the result of careful negotiations and workshops - yet seems damn complicated to me

 

Probably worth reading a few of the links and finding the paracetamol bottle if you do this kind of stuff regularly - although there seems no opt out for just occasional foreign business.

 

So If your customer is in Greece, you need to log into Greek VAT and pay them what you charged the downloader, then again for Spain, and again ..........

 

Wow!

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It almost seems as though it's designed to generate offences to charge Internet companies you don't like with. Think file-sharing, porn, or other things that are technically obeying the law but the governments disapprove of.,,
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Think file-sharing, porn, or other things that are technically obeying the law but the governments disapprove of.,,

 

All they will do is relocated to somewhere out of reach of the regulations, and carry on as before. It's small businesses, like Paul's client, that will bear the brunt of this.

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  • 4 weeks later...

The Government have clarified it:

 

 

"Section 3: Registration for MOSS by businesses currently below the UK VAT Registration threshold (£81,000)

If you supply digital services to a customer in another EU member state, you must account for VAT to the tax authorities in that member state and at that member state’s VAT rate.

 

So you do not have to register for VAT in every member state where you have customers, HMRC has developed a MOSS service for UK-based suppliers of digital services. You can find guidance on MOSS at Register for and use the VAT Mini One Stop Shop.

 

Although it is a condition of registering for the MOSS that you must have a UK VAT registration number to identify the business, you will not lose your UK VAT registration threshold."

 

 

So - you need to register for VAT and get a number, but you're not able to charge and recover VAT, how confusing! How will people tell the difference?

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