Digital Services: Fundamental changes to the way VAT is charged to consumers from 1st January 2015
10 November 2014 by Genie Lab
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The changes to VAT accounting for suppliers of Digital Services (broadcasting, telecommunications and electronically supplied services) will come into effect on 1st January and will impact businesses making such supplies to non-taxable persons, essentially private individuals and organisations that are not VAT registered (‘consumers’) across the EU.
At the moment, UK VAT registered suppliers of digital services to consumers in other member states charge UK VAT at the standard rate (currently 20%) and record and pay this via their UK VAT return.
2. Use the Mini One Stop Shop (‘MOSS’) which allows businesses to submit a single quarterly return via HMRC for the local VAT due in other member states.
- Broadcasting – the supply of television and radio programmes;
- Telecommunications – fixed and mobile telephony, fax and connection to the internet; and
- Electronically supplied services – website/webpage hosting, remote maintenance of programs, online data warehousing, video on demand, downloaded applications (‘apps’), music downloads, gaming, e-books, anti-virus software and online auctions
implications. However, it is understood that other platforms, for example, Google Play act as an agent taking a commission on sales which means you would be responsible for accounting for VAT.
This is a major change and any businesses not already aware and prepared should take steps immediately to establish the impact these changes will have and put in place an action plan to ensure VAT compliance and business stability and competitiveness.
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