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Businesses that sell digital services (eg, ebooks) to non-business customers in other EU countries need to account for the VAT due at the rate applicable in the country where the customer belongs. This rule currently applies to any amount of digital sales made, there is no de minimis threshold.

The VAT charged to those overseas customers must be reported through the VAT MOSS system for each calendar quarter, unless the business is going to register for VAT in each separate jurisdiction that is sells within.

The good news is that a minimum sales threshold of €10,000 (£8,818) is being introduced from 1 January 2019 for digital services sold to consumers into other EU countries. A business can ignore the VAT MOSS rules if the value of its digital services sold to overseas customers in the calendar year is below that threshold, and the sales for the preceding year were also under that threshold. The business will have to apply the VAT rules of its home country to any sales it makes.

The bad news is that this de-minimis sales threshold only applies to businesses which are located within an EU country. When the UK leaves the EU on 29 March 2019, unless the VAT MOSS rules are covered in the EU withdrawal agreement, the new sales threshold will disappear for UK businesses. UK businesses will then have to register for the VAT MOSS non-EU scheme in an EU member state.

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.