We hear a lot about goods and Brexit but not so much about services. So what happens after the 31st December 2020?
The good news for business-to-business supplies of services outside the UK is that there is no change; no change to place of supply or the reverse charge where the service is received. And one plus point is that the need to complete EC Sales Lists ends on 31st December 2020. Likewise, services purchased from outside the UK and received in the UK are still liable to the reverse charge here in the same way as they are now.
But the situation is more complicated in relation to business-to-consumer supplies. At the moment there are various place of supply rules for consumers: the general rule that tax is due where the supplier is located; the special rule for digital services that tax is due where the consumer is located; and various special rules in relation to services supplied where performed, such as cultural, artistic, sporting, scientific, educational or entertainment services.
But the general rule depends on the UK applying EU rules which will no longer be the case after 31st December 2020. Currently, services supplied to consumers outside the EU, if used and enjoyed outside the EU, are outside the scope of EU VAT. Initially, the same will apply to services supplied to consumers outside the UK, but from 1st July 2021, with the implementation of the next phase of the EU E-Commerce Package services supplied to consumers in the EU will be taxed in the EU via the Import One-Stop Shop (IOSS) and registration will be mandatory (and there will be a nil turnover threshold for non-established businesses i.e. based outside the EU).
The special place of supply rules have not changed so that services to consumers supplied where performed will still be taxed in the relevant Member State with registration potentially necessary. For digital services businesses currently registered under Union MOSS (i.e. within the EU) will move to Non-Union MOSS but still account for VAT on digital services to consumers across the EU. But what happens to Non-UK businesses supplying digital services to UK consumers and currently registered under Union MOSS (EU businesses) or Non-Union MOSS (Non-EU businesses)? Well, they remain registered under Union MOSS or Non-Union MOSS for supplies to EU consumers but they will have to separately register in the UK for their supplies to UK consumers.
If you have any specific queries about this please get in touch; we are always happy to help.
The good news for business-to-business supplies of services outside the UK is that there is no change; no change to place of supply or the reverse charge where the service is received. And one plus point is that the need to complete EC Sales Lists ends on 31st December 2020. Likewise, services purchased from outside the UK and received in the UK are still liable to the reverse charge here in the same way as they are now.
But the situation is more complicated in relation to business-to-consumer supplies. At the moment there are various place of supply rules for consumers: the general rule that tax is due where the supplier is located; the special rule for digital services that tax is due where the consumer is located; and various special rules in relation to services supplied where performed, such as cultural, artistic, sporting, scientific, educational or entertainment services.
But the general rule depends on the UK applying EU rules which will no longer be the case after 31st December 2020. Currently, services supplied to consumers outside the EU, if used and enjoyed outside the EU, are outside the scope of EU VAT. Initially, the same will apply to services supplied to consumers outside the UK, but from 1st July 2021, with the implementation of the next phase of the EU E-Commerce Package services supplied to consumers in the EU will be taxed in the EU via the Import One-Stop Shop (IOSS) and registration will be mandatory (and there will be a nil turnover threshold for non-established businesses i.e. based outside the EU).
The special place of supply rules have not changed so that services to consumers supplied where performed will still be taxed in the relevant Member State with registration potentially necessary. For digital services businesses currently registered under Union MOSS (i.e. within the EU) will move to Non-Union MOSS but still account for VAT on digital services to consumers across the EU. But what happens to Non-UK businesses supplying digital services to UK consumers and currently registered under Union MOSS (EU businesses) or Non-Union MOSS (Non-EU businesses)? Well, they remain registered under Union MOSS or Non-Union MOSS for supplies to EU consumers but they will have to separately register in the UK for their supplies to UK consumers.
If you have any specific queries about this please get in touch; we are always happy to help.
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