Category: Euro VAT

Will Small Businesses be exempted from VAT MOSS?

Europa Impressionen

Before 1st January 2015 all businesses supplying telecommunications, broadcasting and e-services such as downloaded ‘apps’, music, gaming, e-books and similar services to private consumers located in other EU Member States (referred to as ‘B2C’ supplies) were taxed where the business supplier was established, which is simple to understand and implement.

Since 1st January 2015 VAT is now charged in the country where the customer has ‘use and enjoyment’ of the services.

So lets say you are an American (normally zero rated) on holiday in France, even though you pay with an American credit card and buy from a UK supplier because you are reading your ebook in France, French VAT will apply. Sounds like a nightmare, doesn’t it.

To help with this HMRC introduced the VAT MOSS (Mini One Stop Shop).

Overview

If your business supplies digital services to consumers in the EU, you can register with HM Revenue and Customs (HMRC) the VAT Mini One Stop Shop (VAT MOSS) scheme. There are 2 UK VAT MOSS schemes that operate in an almost identical way:

  • Union VAT MOSS scheme for businesses established in the EU including the UK
  • Non-Union VAT MOSS scheme for businesses based outside the EU (for example, the USA, Canada, China)

By using the VAT MOSS scheme, you won’t have to register for VAT in every EU member state where you make digital service supplies to consumers.

Once you register for a UK VAT MOSS scheme HMRC will set you up automatically for the online VAT MOSS Returns service.

You need to submit a single VAT MOSS Return and payment to HMRC each calendar quarter. HMRC will then forward the relevant parts of your return and payment to the tax authorities in the member state(s) where your consumers are located. This fulfils your VAT obligations.

Unless businesses opt to register for MOSS, businesses that make intra EU B2C supplies of telecommunications, broadcasting and e-services will be required to register and account for VAT in every Member State in which they have customers. MOSS will give these businesses the option of registering in just the UK and accounting for VAT on supplies to their customers in other Member States using a single online MOSS VAT return submitted to HMRC. This will significantly reduce their administrative burdens.

  • Examples of telecommunications services include: fixed and mobile telephone services; videophone services; paging services; facsimile, telegraph and telex services; access to the internet and worldwide web.
  • Examples of broadcasting services include: radio and television programmes transmitted over a radio or television network, and live broadcasts over the internet.
  • Examples of e-services include: video on demand, downloaded applications (or “apps”), music downloads, gaming, e-books, anti-virus software and online auctions.

Fiscalis conference (7th to 9th September 2015)

Representatives from all EU finance ministries were at the Fiscalis conference in Dublin last week to discuss the implementation of the new EU VAT rules, and how they have been working since their introduction in January 2015.

Accounting Web reported …

One of the key takeaways from the consultation was a general agreement that there should be a threshold to exempt smaller businesses from the rules. The commission stated that it intends to propose legislation for a threshold beneath which companies will be VAT exempt, but did not confirm a figure.

There was also a general agreement that above this threshold there should be what many are calling a ‘soft landing’: A simplified version of the rule for businesses that does not create a financial cliff for those who hit the threshold.

Let’s hope that an exemption can be put in place very soon and ideally as proposed in the EU VAT Action Campaign below

EU VAT Action Campaign (started 28th August 2015)

Please circulate this article as widely as possible, as soon as possible, with as many of your business contacts and other networks.

Write to your national tax authority and finance ministry, to your MPs, MEPs, other elected representatives and to any business organisations which you belong to, insisting that the EU act immediately to:

1. Introduce a threshold of €100,000 for cross-border trade (i.e. based on how much you’re selling digitally to the rest of the EU, outside of your home country). As far as your domestic turnover is concerned, your own country’s VAT rules will still apply.

2. Simplify the rules for all micro businesses (i.e. sub-€2m turnover) to allow ONE piece of data as evidence of place of supply, instead of the current 2-3, with that piece of data being the customer location as supplied by the payment processor to businesses using all levels of their services, not just to those purchasing premium options.

3. Immediately suspend these rules for micro businesses, so that they can revert to their domestic VAT rules and pay taxes according to those regulations during the 2 years it could take for the agreed idea of a VATMOSS threshold to become law.

4. Amend the legislation so that all Member States are legally required to direct their VATMOSS communications through the business’s home tax authority for all micro businesses, to remove the threat and fear of receiving demands and ‘system error’ letters from 27 different tax authorities.

One last thing; please take the few extra minutes to contact these people direct rather than using a bulk-emailing service. These websites have become a victim of their own success in flooding inboxes, so letters coming via these routes are increasingly ignored. You can still send the same letter to them all but you will need to copy and paste and send it individually to be most effective.

 

steve@bicknells.net

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Are you accounting for VAT on Google AdWords and Linked In?

Pay per Click

AdWords are invoiced from the Republic of Ireland and subject to ‘Reverse Charge‘ VAT.

When you buy services from suppliers in other countries, you may have to account for the VAT yourself – depending on the circumstances. This is called the ‘reverse charge’, and is also known as ‘tax shift’. Where it applies, you act as if you are both the supplier and the customer – you charge yourself the VAT and then, assuming that the service relates to VAT taxable supplies that you make, you also claim it back. So there’s no net cost to you – the two taxes cancel each other out. [HMRC]

If you can’t give Google a UK VAT registration number they will charge Irish VAT at 21%.

If you can supply a VAT registration number you won’t be charged Irish VAT and will be subject to ‘Reverse Charge’, this means you calculate the amount of VAT – Output Tax – on the full value of the services supplied to you, and then fill in the relevant boxes on your VAT Return as follows:

  • put the amount of VAT you calculated in Box 1, and if you’re entitled to reclaim the VAT on your purchase of these supplies, also put the same figure in Box 4 (this in effect cancels out the figure in Box 1)
  • put the full value of the supply in both Box 6 and Box 7

So all the figures net off to Zero!

If you make reverse charge sales – sales to which a reverse charge is applied – you must notify HMRC and send in regular Reverse Charge Sales Lists.

Linked In invoices are also subject to ‘Reverse Charge’ this is how you can give Linked In your VAT Registration:

If you purchase LinkedIn products for business purposes, you can provide your Value Added Tax # (for European Union or EU VAT customers) for proper tax handling. This information can be added for future orders (not past receipts) on the Payment section of your Privacy & Settings page.

To add your VAT number:

  1. Move your cursor over your profile photo in the top right of your homepage and click Privacy & Settings. For verification purposes, you may need to sign in again.
  2. Click Manage Billing Info.
  3. Click Edit next to the VAT # field.
  4. Enter the 2-character country code followed by your VAT#. For example, LinkedIn’s Irish VAT# is IE9740425P.
  5. Click Update.

Here is a great guide I found which explains how to master adwords

https://www.paidtraffic.io/blog/adwords-mastery-guide-start-small-win-big/

 

steve@bicknells.net

VAT crisis for Stalls, Car Boots, Serviced Offices and Markets

Crafts- Market /Craft fair with stall holder

Until now the hire of stalls and other pitches used for temporary sales events have generally been considered to be the supply of land and exempt from VAT in accordance with Item 1, Group 1, Scedule 9 VAT Act 1994 and http://www.hmrc.gov.uk/vat/managing/reclaiming/partial-exemption.htm

But following discussions at EU level in connection with antiques fairs HMRC now feel that VAT should be chargeable at Standard Rate.

Not only that HMRC want VAT to be payable on add-on services such as promoting the fair, providing power and security which had been treated as incidental and VAT exempt.

The change in policy (according to http://www.tipsandadvice-vat.co.uk) came about following a VAT inspection and the decision is now being appealed.

Whilst the case applies to antiques if HMRC win it will be applied to:

  • Car Boot Sales
  • Services Office Accomodation
  • Market Stalls

This could have a massive effect on small traders who are not VAT registered.

steve@bicknells.net

 

A Trillion Euro’s lost to tax evasion in the EU

 

A Trillion is a huge amount, its almost too large to imagine.

Here is the latest campaign video

http://ec.europa.eu/avservices/video/player.cfm?ref=I080915

As part of the intensified battle against tax fraud, the Commission launched on 6th February 2014 the process to start negotiations with Russia and Norway on administrative cooperation agreements in the area of Value Added Tax (VAT). The broad goal of these agreements would be to establish a framework of mutual assistance in combatting cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors. Given the growth of these sectors, more effective tools to fight such fraud are essential to protect public budgets. Cooperation agreements with the EU’s neighbours and trading partners would improve Member States’ chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. The Commission is therefore asking Member States for a mandate to start such negotiations with Russia and Norway, while continuing exploratory talks with a number of other important international partners.

http://ec.europa.eu/taxation_customs/taxation/tax_fraud_evasion/missing-part_en.htm

steve@bicknells.net

VAT Returns may soon be monthly…

3D Vat button block cube text

From January 2017 the European Commission would like to make VAT returns monthly in all member states. Currently most UK businesses file quarterly, they only file monthly if they get regular refunds.

The European Commission see this as cutting red tape, but I am not sure how going from 4 returns to 12 returns cuts red tape?

The Commission say they have received complaints from companies who do business across Europe about confusion over the frequency of returns.

The EC is hoping to introduce a single format return, with just five mandatory boxes.  This will include:

  1. input VAT;
  2. output VAT;
  3. net VAT payable;
  4. value of input transactions; and
  5. value of output transactions.

and there could be a concession for small businesses allowing them to continue to do quarterly returns.

Do you think monthly returns would be better or worse for UK Business?

steve@bicknells.net

 

EU VAT B2C – e services to be vatable where they are consumed

Europa Impressionen

At the moment all businesses supplying telecommunications, broadcasting and e-services such as downloaded ‘apps’, music, gaming, e-books and similar services to private consumers located in other EU Member States (referred to as ‘B2C’ supplies) are taxed where the business supplier is established, which is simple to understand and implement.

In the Finance Bill 2014 this will be changed and from 1st January 2015 VAT will be charged in the country where the customer has ‘use and enjoyment’ of the services.

So lets say you are an American (normally zero rated) on holiday in France, even though you pay with an American credit card and buy from a UK supplier because you are reading your ebook in France, French VAT will apply. Sounds like a nightmare, doesn’t it.

To help with this HMRC are introducing the VAT MOSS (Mini One Stop Shop) and businesses can register from October 2014.

Unless businesses opt to register for MOSS, businesses that make intra EU B2C supplies of telecommunications, broadcasting and e-services will be required to register and account for VAT in every Member State in which they have customers. MOSS will give these businesses the option of registering in just the UK and accounting for VAT on supplies to their customers in other Member States using a single online MOSS VAT return submitted to HMRC. This will significantly reduce their administrative burdens.

  • Examples of telecommunications services include: fixed and mobile telephone services; videophone services; paging services; facsimile, telegraph and telex services; access to the internet and worldwide web.
  • Examples of broadcasting services include: radio and television programmes transmitted over a radio or television network, and live broadcasts over the internet.
  • Examples of e-services include: video on demand, downloaded applications (or “apps”), music downloads, gaming, e-books, anti-virus software and online auctions.

HMRC VAT Place of Supply Link

If you supply e services its worth considering the accounting and pricing changes that you will need to implement and how you will incorporate the ‘use and enjoyment’ rules.

 

 

steve@bicknells.net