VAT rule changes to broadcasting, telecommunications and e-services from 1 January 2015

Effective from 1 January 2015, alterations to the European Union (EU) VAT place of supply will affect businesses who provide broadcasting, telecommunications and e-services to consumers, as they will be required to keep records about the variety of electronic services they supply, to whom they supply them to and to where they are supplied.

Businesses that may be affected by these changes are encouraged to start preparing for them now.

At present, broadcasting, telecommunications and e-services place of taxation is established by the location of the business who is supplying the services. This is to change come 1 January 2015, as it will then be established by the location of the customer.

As this change will have an effect on the business records a company keeps, thorough preparations are strongly advised in the following areas:

  • Who provides the service to the customers – is it the company themselves or is there any intermediary acting in their own name but on the company’s behalf?
  • Are the customers taxable or non-taxable?
  • Decide upon the ‘place of consumption’ of the service – is it at the customer’s residential address, or is it provided to other businesses (where different rules apply)
  • Keep customers’ billing addresses or bank details up to date – as this may need to be used as evidence in supporting the decision regarding the ‘place of consumption’.

By preparing for this now, businesses will have an advantage for when it comes to complete the new-to-be-introduced VAT MOSS Return, as this information may be required electronically by the EU tax authority.

VAT MOSS, (VAT Mini One Stop Shop) ‘enables businesses to complete a single return covering their broadcasting, telecommunications and e-services sales in any Member State in which you do not have a place of business.’ The service will be available on 1 January 2015; however it will be available to register with from October 2014. Its benefits generally affect EU businesses and include:

  • Making VAT declarations and payments in all of the company’s EU supplies of services to the one MemberState.
  • If chosen to register for VAT MOSS in the UK, all VAT due on sales in all Member States where these services apply can be paid at each state’s own tax rate
  • This can be done by submitting a single VAT MOSS return and payment to HM Revenue & Customs (HMRC)
  • For non-EU businesses already registered or the VoES scheme, information on how to transfer to the VAT MOSS scheme will be made available.