E-Commerce & Service Supplies in the UK
In the UK, services are subject to taxation. Following its departure from the EU, the UK is no longer part of the EU’s “One-Stop Shop” system, which streamlined the registration process for TBE (Telecommunications, broadcasting, and electronic services).
Suppliers from outside the UK providing services to its consumers usually need to register for VAT in the UK if those services are considered to be supplied within the United Kingdom.
Services & E-Commerce
in the UK
In the UK, services rendered to end-users, encompassing telecommunications, broadcasting, and electronic services, are taxable. Notably, after departing from the EU, the UK no longer participates in the EU’s “Mini One-Stop Shop” system that once eased the TBE Registration process. For more information on MOSS or the One-Stop-Shop, refer to the following section on UK VAT Law.
For suppliers situated outside the UK who cater services to UK consumers, registration for VAT in the UK becomes necessary when the service is deemed to be delivered within the nation.
Mini One Stop Shop (Discontinued)
Overseas providers distributing telecommunications, broadcasting, and electronic services to UK end-users traditionally had to register and manage VAT within the UK. Before the UK’s departure,
Such providers could streamline VAT for the UK using the EU’s “Mini One-Stop Shop” mechanism, provided they left the EU by December 31, 2020. With this system no longer in play, suppliers must explore alternative ways to register in the UK and ensure their VAT registration adheres to conventional protocols.
Selling in the UK?
E-commerce in the UK
Companies outside of the UK that engage in e-commerce directed towards UK customers should be aware of the specific VAT regulations in place. When the cumulative value of sales to UK customers exceeds £85,000 within a fiscal year, it becomes mandatory for the company to register for VAT in the UK.
The determination of the ‘place of supply’ is crucial. For tangible goods, it is considered to be the location where the goods are at the time of delivery to the customer. For services, it’s defined by the customer’s location. Certain categories of goods and services, such as food, children’s clothing, and medical supplies, are classified as zero-rated for VAT, implying that they are not subjected to VAT.
Additionally, the reverse charge mechanism is an important provision for certain supplies of goods and services. Under this mechanism, the responsibility of paying the VAT to HMRC shifts from the supplier to the recipient. This provision is specifically designed to counteract fraudulent activities
Companies exporting goods or services to the UK must meticulously evaluate the VAT implications of their operations. Consulting with a qualified accountant or VAT specialist is recommended to ensure legal compliance
It’s also essential to note that VAT and e-commerce regulations in the UK are subject to changes. Regular updates and consultations with HMRC are advised for clarity on registration requirements. Given the complexity of the regulations, companies should consider the most suitable method for VAT compliance that aligns with their business model.
Last Updated:30/08/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
