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Final countdown to new VAT rules

Published on Wednesday, 24th September 2014
UK businesses selling digital download products to customers in other EU countries have less than 4 months to prepare to comply with new EU-wide VAT rules.

UK businesses selling digital download products to customers in other EU countries have less than 4 months to prepare to comply with new EU-wide VAT rules.

From 1 January 2015, UK businesses that sell “e-services” to non-business customers in other EU member states will be required to account for VAT in the EU country where their customers download the products.

Any UK business that sells a product that is downloaded by a non-business customer is potentially liable to register and pay VAT in all of the EU countries in which their products are downloaded.  Examples of e-products include, but are not limited to:

- music

- e-books

- computer games

- e-learning packages

- web hosting

- ringtones

The 2015 changes represent a massive VAT compliance shift for UK businesses selling download products to non-business EU customers.  Businesses will need to identify the location of all their customers and may have to register for VAT in all EU countries where their customers download the products.  A simplification may avoid multiple EU registrations, but from 2015, VAT has to be paid where the downloads take place, not where the business is established.

For further information on this, please contact Ian Stinson, VAT partner at Preferred Supplier Smith & Williamson, on 0117 376 2105 or email ian.stinson@smith.williamson.co.uk