A change in the place of supply rules came into effect from 1 January 2015. This means that VAT on digital services (such as apps, online auctions and internet connections) within the EU will be paid in the consumer’s country rather than the supplier’s.
The VAT rate will also be that of the consumer’s country. For example, if a UK business sells e-books to a consumer in Germany they will have to pay VAT at the German rate of 19%.
What this means for businesses? The new rules mean that businesses that sell digital services in the EU need to register and pay VAT in each EU country they export to.
To circumnavigate this, the government has introduced the VAT Mini One Stop Shop (MOSS). This service allows businesses to submit a quarterly VAT MOSS return and payment to HMRC.
HMRC will then send the relevant part of the return and any payment to relevant tax authority.
To see our VAT update go to the resources page of our website: