The VAT rules for businesses suppling digital services to private consumers in other member states change with effect from 1 January 2019.
From that date, the place of supply will be the UK where both:
- a UK business is not established in any other EU member state; and
- the total value of cross-border digital sales is less than £8,818 in the current and preceding calendar years.
Businesses affected will no longer need to register for VAT in other EU countries where they have consumers or use the VAT Mini One Stop Shop Scheme (VAT MOSS).
Where the business turnover is below the UK VAT threshold (currently £85,000) it will also be possible to de-register from VAT.
Businesses based outside of the EU but registered for VAT could not previously use the non-union VAT MOSS. This restriction is now being lifted.
Those businesses registering for the scheme will send HMRC a VAT MOSS return of qualifying sales and payment each calendar quarter. HMRC will send the relevant parts of the return and payment to the tax authority of the country where the consumers are based. The business may however, still need to send a separate VAT return if it has non-qualifying sales.