Are you complying with the new VAT rules for offshore e-services?

Many public sector bodies are expanding into the international arena and undertaking activities outside of the UK. Associated VAT issues can be easily overlooked if not considered from an early stage and, when this happens, you can run the risk of not meeting all of your VAT obligations in other countries.

From this month, supplies of electronic services, e.g. e-publications, educational on-line or digital training services etc. will, for VAT purposes, be supplied in the country of the customer and subject to the VAT rate applicable in that country. Many public sector bodies may think that, due to their status, they will not be affected by these changes. However, if electronic services are provided to individual consumers in other EU countries, organisations could be required to register and account for VAT in each EU country where they supply these services.

As a simpler way of accounting for VAT in multiple EU member states, it may be possible to use the newly introduced VAT Mini-One Stop Shop online service (VAT MOSS). This is designed to assist suppliers of digital services in Europe to cope with the new VAT compliance rules, and allows them to record and account for VAT due on EU supplies of electronic services on a calendar quarterly return, submitted to a single elected member state.

If you are likely to be affected, you will need to decide how to account for any VAT due on your EU supplies, either under the VAT MOSS service or otherwise. Please contact our VAT team for more information.