Following many months of preparation, the changes to the place of supply rules for B2C supplies of TBE services have now come into effect from …
New rules for Telecoms, Broadcasting and E-services (TBE) now effective
Following many months of preparation, the changes to the place of supply rules for B2C supplies of TBE services have now come into effect from 1 January 2015.
Legislated in Council Implementing Regulation (EU) No.1042/2013, B2C supplies of TBE services which require minimal human intervention are now taxable in the location of the non-business customer, leading to the possibility of up to 28 VAT registration obligations across the entire EU.
Of course, as a result of the regulation, the MOSS scheme (both Union and non-Union) was introduced which allows for VAT registration in one Member State (generally where the business ‘belongs’ for EU businesses) with the result that all VAT due can be reported in one return before being remitted to the relevant national authority. MOSS registration commenced in certain EU Member States early in October 2014.
However, within the UK there has been much debate as a business cannot register for MOSS unless they already hold a UK VAT registration, which many small and micro businesses in the UK providing TBE services do not due to the UK’s generous VAT registration threshold for UK established businesses, currently standing at £81,000 in any 12 month period. Indeed any requirement to register for UK VAT would see such SME’s lose the benefit of the threshold and would increase the price of local sales by 20%.
Following a campaign by small business leaders and lobbying of HMRC, business brief 46(2014) was released by HMRC which stated that whilst UK businesses would be required to register for UK VAT and then MOSS, there would be no requirement to account for UK VAT whilst sales made in the UK remained under the threshold.
Following this release, Revenue Ireland also released e-brief 103/14 which broadly followed the same theme as HMRC’s brief in allowing Irish businesses to effectively retain the benefit of the threshold for local sales.
It remains to be seen if other EU Member States decide to implement such measures, and more importantly it will be interesting to monitor the response of the EU to these announcements.
Brendon Silver
VATit GROUP
