Time is running out! With less than a month to go until the new VAT rules for B2C supplies of Broadcasting, Telecommunications and eServices (BTE) come into effect, now is the time to ensure that you are on track to have the required procedures and systems changes in place for 1 January.
Under the new rules the place of supply for EU providers of BTE services to consumers located in other EU countries changes from the place where the supplier is located to the place where the customer is located. This means that whereas until now a UK supplier would simply charge UK VAT on all supplies to consumer customers within the EU, from next year the supplier will be required to charge the VAT of the country in which the consumer is based. Potentially, UK suppliers will have to charge the VAT of up to 28 different countries depending on where its customers are based.
As a facilitation measure, the EU has introduced an optional VAT return process known as the “Mini One Stop Shop” (MOSS) which will enable businesses affected by these changes to include all its EU VAT on a single VAT return submitted to the local tax authority. The relevant VAT will then be reallocated to the various overseas tax authorities. If preferred, Suppliers can choose instead to register for VAT in every country in which they have customers, though the compliance burden of doing this is likely to be significant.
Suppliers affected by these changes should now check that they have addressed the following issues to reduce potential VAT risks:
- Have you identified if your services fall under the BTE classification?
- Do you have the relevant evidence to prove where your customer is located? This not as straight forward as it sounds – your customer may be physically located in France whilst downloading or accessing your services but the mobile device on which they are accessing the services may be registered to Spain. Where do you tax the services?
- Can your billing system deal with charging multiple overseas VAT rates?
- Have you decided whether to register for the VAT MOSS scheme? Registration is available now via HMRC’s online system.
- If not, have you registered for VAT in every EU country where you have customers?
Further information on the new rules is available in an HMRC guidance document available here (https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop) or contact us if you require further help and guidance.
Keep visiting our VAT blog to keep up to date with the latest VAT insights.