Insights

If you currently provide B2C services to customers in the EU, you should be aware of some important changes to the way VAT is accounted for. These vary depending on the nature of the services being delivered.

‘TBE’ Services - Telecoms, broadcasting & electronic services

Currently the ‘VAT MOSS’ system simplifies VAT charging for UK based businesses offering B2C services. VAT MOSS allows them to declare and pay VAT due on B2C supplies - like software downloads, subscriptions and app charges - with a single VAT return.

After registering with HMRC, the EU VAT MOSS scheme allowed UK businesses to submit one VAT return showing any sales and the relevant VAT charges made to different EU countries. After January 1 2021, UK businesses must use the Non-EU VAT MOSS scheme (Non-Union MOSS) instead.

Professional, technical, financial, intellectual and other intangible services

There is an important change to the rules for these types of services when supplied B2C to EU based customers after January 1 2021! There will no longer be a requirement for UK businesses to charge VAT on these services after Brexit completes.
For examples of the types of services that fall under this rule, please see HMRC’s Public Notice 741a.

Certain other services

Some services supplied to consumers in the EU do require registration for VAT in the relevant EU member country where the service is delivered. These are: accommodation services carried out by non-established taxable persons; admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events, such as fairs and exhibitions; transport services; services of valuation and work on movable tangible property; services connected to immovable property, such as construction, architect and estate agent services; the supply of restaurant and catering services for consumption on board ships, aircraft or trains etc.

There are plans to extend the Non-Union scheme outlined above to all cross- border B2C supplies of services which are deemed to take place in a member state under the current place of supply rules (such as those mentioned above). This would be effective from July 31 2021.

This means if a supplier decides to use the Non-Union scheme, they must declare and pay VAT for all their B2C supplies of services in the EU. The supplies should not be declared through separate local VAT registrations.

If you would like help with readying your VAT processes for Brexit, please contact: partners@rjp.co.uk