The UK Revenue & Customs service (HMRC) has launched an online ‘one-stop shop’ to simplify the task of broadcasters and other digital media companies in complying with new European tax rules that will require them to pay VAT in the countries in which their services are consumed rather than the country in which they are based.
Currently, tax on the supply of broadcasting, telecommunications and electronic services, otherwise known as ‘digital services, to private consumers is paid in the Member State where the supplier of the service is established. However, from 1 January 2015, tax will be paid in the Member State where the consumer is located.
According to HMRC, the changes, by ensuring that cross-border supplies of services are taxed by, and under the rules of, the Member State where those services are actually used or consumed, will help level the playing field for UK businesses and consumers and make sure that the UK government receives its fair share of VAT revenues on UK-consumed services.
However, the rules also mean that digital media companies must register for VAT in every EU Member State where they supply digital services to consumers, meaning that they could face additional costs.
HMRC will launch a VAT Mini One Stop Shop (VAT MOSS) that businesses can register to use from next month. According to HMRC, the will be able to submit a single quarterly VAT MOSS return and payment, to just one Member State tax authority, to cover all their EU business to consumer supplies. The VAT rate used will be that of the Member State where each consumer is resident or located when the service is supplied.
To take advantage of the VAT MOSS, businesses which aren’t registered for VAT need to register for VAT, and then register for the VAT MOSS in the same Member State. After that they will then only have to submit one VAT MOSS return to cover all their EU digital supplies.
Business that aren’t based in, or registered for VAT, in the EU but make digital service supplies to EU consumers, can register in any state to use a non-EU VAT MOSS online service.
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