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Now, where did I send that software?

A hot topic for some time, the VAT place of supply rules have recently given rise to a complication for UK firms supplying services over the internet to customers elsewhere in the EU.


Where a particular supply takes place for VAT purposes might not, at first glance, look like a question that should be difficult to answer. It surely must be a simple matter of fact, you might think. Well, if you do, think again!


Increasingly, businesses in the UK, even relatively small ones, find themselves supplying goods and services to customers in other countries - both inside and outside the European Union (EU). As a result, a complex series of rules have developed to determine where a supply is deemed to take place and where, and by whom, VAT is payable.


Nowhere are these rules more involved than in the area of services supplied to overseas customers where the answer to the question will depend on, among other things, where the customer belongs, whether he is or is not in business and what type of service is being supplied.


A recent change means that electronically supplied services to non-business customers in the EU, previously subject to VAT in the country where the supplier belongs, are now subject to VAT in the customer’s home country. This can, quite easily, make a UK business liable to register for VAT in one or more of 27 other EU countries. Many countries have no registration threshold and making even relatively small value supplies could leave a business liable to register there.


Recognising that this could be an unworkable administrative nightmare, a scheme has been introduced from October 2014 to enable businesses who find themselves in this position to register for “MOSS” (mini one-stop-shop). They will complete one return showing the sales made in, and VAT due to, each country, to be filed with HM Revenue and Customs, who will collect the total due and pass it on to the appropriate overseas authorities. Due to the different registration thresholds, a business not liable to be registered in the UK could, nevertheless, need to register overseas or complete one of these forms.


“Electronically supplied services” includes supply of music, film and games, website supply or hosting, distance maintenance of programmes and equipment, supplies of software, distance teaching etc.


If you supply electronic services to customers who are not in business but are based in other EU countries you need to check whether or not your services are liable to VAT in those countries. If you think this could affect you please contact robinson+co’s VAT partner Roger Troughton on rogertroughton@robinsonco.co.uk or your usual contact in the firm.

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