VAT Penalties Blog


How do you feel about having to tell a client that they need to register for VAT in 27 other EU countries besides the UK?

The place of supply rules relating to where VAT is due for certain services will be changing within the European Union with effect from 1 January 2015. This change will affect businesses providing telecommunications, broadcasting or electronically supplied services to non-taxable or private customers in E.U. Member States.

As far as electronic services are concerned, examples of the service affected include:

  • supply of websites or web-hosting services
  • downloaded software (including updates of software)
  • downloaded applications or apps
  • downloaded images, text or information, including making databases available
  • digitised books or other electronic publications
  • downloaded music, films or games
  • distance learning
  • electronic auctions
  • internet service packages

At present, these services are subject to VAT where the business supplier is established. From 1st January 2015, businesses will need to charge and account for VAT in the E.U. country where the customer belongs/service is consumed.

In order to avoid a business having multiple VAT registration across the EU, HMRC has announced that effected businesses can opt to use something known as the “Mini One Stop Shop” or “MOSS” for short. MOSS will enable businesses to submit a single return encompassing supplies in each Member State at the VAT rate in force in that country. The alternative is for businesses to register and account for VAT (at the appropriate rate of tax) in every Member State in which they have customers!

So what does this mean for your clients?

Well, they need to think about how they can capture the information required by HMRC and set out in their Business Brief, a copy of which is attached. Clients will need to adapt their accounting systems to ensure that they can comply with HMRC’s requirements and accurately determine where their customer is located and where the services are actually “consumed”.

For some clients this may mean major changes or adaptations to accounting systems and these businesses need to be thinking now about how and when to implement them.

Call our VAT experts today for clarification and advice on the new EU VAT requirements and any other VAT or Customs Duty issues you, or your clients are facing.

VAT-Penalties Team


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