UK: Update on the VAT Guidance for supplies of digital services to consumers
VAT on services provided outside of the United Kingdom is a complex area and has changed from January 2021 with Brexit. The pre-January 1, 2021, procedures for Digital Sales into the EU, especially MOSS (Mini One Stop Shop) managed by the United Kingdom and the European Union (10,000 EUR or 8,818 GBP threshold), no longer apply.
Digital Services to Consumers
Digital Services are defined thoroughly under the VAT laws of both the UK and the EU. Generally, Digital Service is one that is supplied with little or no human participation and with a high degree of automation. These include:
- Radio and television broadcasting services
- Communication services
- Electronically delivered services
The following are the important factors to consider for B2C digital sales into the UK:
- If you are a company providing digital services to UK customers, such services are subject to UK VAT. VAT must be collected and remitted to the UK on the sale of digital products. Regardless of value, VAT is charged on all business-to-consumer (B2C) sales into the UK, both physical and digital.
- If you sell digital services to customers outside the UK, you are not required to collect UK VAT. They may be subject to VAT in the nation in which the consumer resides.
- If you provide digital services to customers via a third-party platform or marketplace, the digital platform is liable for VAT on the supply rather than you.
- If your only role in the supply is to provide for the processing of payments you’re not regarded as a digital platform, and you do not have to account for the VAT.
For further information, see HMRC Guidance:
Latest update as of 28 March 2022:
You can no longer email HMRC to check whether you supply digital services. The online form provided on the website should be used to write to HMRC, or through the phone.
If your supplies are liable to UK VAT, we can help you register for UK VAT if you are based outside the UK.
Source: gov.uk
