Cross-Border Services.

You may have heard that the price of electronic books and music will rise on 1 January 2015.

This because electronic services (including e-books and music), will be subject to VAT in the country where the customer lives from 2015. Currently large suppliers of electronic services tend base themselves in the EU country with the lowest rate of VAT, so they can sell their services with that low rate attached.

This change in the law could affect your business if you sell electronic services to non-business customers in other EU countries. “Electronic services” includes a wide range of things including the provision of software online, writing or supporting websites.

Say you design a website for someone in France (who is not a business).

From 2015 that sale will be subject to French VAT rates and you will probably have to register for VAT in France, as the French VAT registration threshold is very low. Similarly you may have to register for VAT in other EU countries where you sell electronic services to non-business customers.

Fortunately there will be a “mini one stop shop” (MOSS) on the HMRC website that will allow you to register for VAT in all the EU countries in which you sell electronic services, and make a single VAT return for all those countries. The MOSS will be open to start the registration process from October 2014.

In the meantime you need to check which of your products will come within the definition of “electronic services” for these new rules. We can help you with that.

If you are selling across EU borders you also need think about the following:

  • How to identify the location of your customers, and store that information.
  • How to determine if your customer is a business or not, and what evidence will you need to support this decision.
  • If you sell through an agency, check what the contract says about who takes responsibility for VAT registration.

News / Blog

16th
November

The Paradise Papers Leak Sparks Debate About Tax … Again

The Paradise Paper leaks last week have have reignited a public debate again about what is permitted in reducing tax…

8th
November

VAT Threshold Cut Proposed in Latest Report Could Spell Additional Pain for Stockport Small Business

Stockport small businesses face being brought into VAT if the government accepts the Office of Tax Simplification VAT reforms that…

1st
November

Three More Autumn Budget Predictions

Like many in the financial world, we are preparing for first full autumn budget. This week, we are looking at…

1st
November

Using the IHT gift exemptions

As Benjamin Franklin observed in 1789 ‘In this world nothing can be said to be certain, except death and taxes.’…