The rules around charging VAT are changing for digital business in the new year.
Here’s a reminder of the general rule for VAT on the supply of services (as opposed to goods):
In the EU:
B2B – Outside the scope of UK VAT (However, you may need to register for VAT in the country of supply)
B2C – UK VAT chargeable as normal (if your business is a UK company OR your services are being supplied from a UK establishment OR the UK is your usual place of residence)*
- Except for certain cases under special rules https://www.gov.uk/vat-how-to-work-out-your-place-of-supply-of-services#special-rules:
- Hiring out a means of transport
- Land and property services
- Events
- Intermediaries
- Work carried out on goods
- Transport
New rule
The rules for B2C services are changing for digital businesses (https://www.gov.uk/vat-on-digital-services-in-the-eu).
From January 2015, VAT will be charged (and paid) in the consumers country, and at the rate applicable in that country.
The rules for B2B services is not changing. So if you supply all of your services to businesses, continue as you are i.e. do not charge UK VAT, but you may need to register in the countries) that you are supplying to, depending on the registration thresholds of that country.
Outside EU – Outside the scope of UK VAT – no change
This is obviously a very tricky area so if you are in any doubt as to how you are affected, give us a call on 0161 457 0210 and we’ll bring you right up to speed!
