Currently, the place of taxation for the supply of digital services is determined by your location as the supplier. However, from 1 January 2015, the place of taxation will be determined by the location of the consumer for Digital Suppliers to the EU.
This is a significant change, and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before.
Enter the new VAT MOSS, or Mini One Stop Shop.
The VAT MOSS will save digital services suppliers from having to register for VAT in every Member State where they do business, removing a significant administrative burden.
The digital services affected include most types of:
- E-service supplies.
Businesses with their main operation or headquarters in the UK will register with HMRC to use the service. Between 27,000 and 42,000 UK businesses are expected to register for VAT MOSS in the UK.
While businesses have been able to register from 20 October 2014, the service will start operating from 1 January 2015 across all EU member states.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
Image courtesy of HMRC.