Showing posts with label reverse charge. Show all posts
Showing posts with label reverse charge. Show all posts

Thursday, January 14, 2021

Brexit VAT changes: a practical step by step guide

The Brexit transition period ended at 11pm on 31st December 2020, and there are changes that you need to be aware of when preparing your VAT return. 

Some of the key changes relating to businesses in Great Britain and their implications on the running of their business are outlined below. Please note however that businesses in Northern Ireland are subject to a new NI protocol and that the rules below don't apply to them. 

VAT Returns 

Boxes 8 and 9 were used for reporting sales of goods to, and purchases from the EU, so those will no longer be required for transactions from 1st January 2021 onwards. You will however need to report any transactions which took place prior to 1st January. These boxes will eventually be removed from the VAT return format. 

Box 2 was used for reporting ‘acquisition tax’ on goods bought from EU VAT registered businesses. From 1st January this box will only be used by businesses in Northern Ireland who buy goods from the EU. 

Service supplies

Business to Business (B2B) supplies of services

The general rule is that the place of supply is where customer belongs  and that does not change. so treatment of these sales will remain the same.
  • EU customers will continue to account for local VAT in their own countries via the Reverse Charge.
  • EU suppliers will continue to supply their services to UK businesses free of any VAT.  UK businesses must continue to account for reverse charge VAT on receipt of these services.
     

Business to Consumer (B2C) supplies of services

The general rule is that the place of supply is where the supplier belongs  and that does not change either. So UK VAT will continue to apply (note there are some exceptions to the general rule).
 
There is an another exception for businesses making B2C supplies of digital services as the current threshold of £8,818 no longer applies from 1st January (see below for more details).

Goods sold to the EU 

Goods sold to a EU customer will now be reported as zero rated sales - regardless of whether the customer has an EU VAT registration number or not. 

UK businesses who sell to non-VAT registered EU individuals will need to consider whether they or their customer will be responsible for paying EU VAT when the goods arrive in the EU. This must be made clear to the purchaser in the terms and conditions of sale. If the UK business is responsible then it will need to register in the relevant EU countries. 

Thursday, December 15, 2016

What is a European VAT number?

In July 2013, VAT rules for digital services sold to individuals and non VAT registered businesses were changed. From that date, these services, when supplied to EU consumers, are to be subject to VAT in the Member State where the customer belongs, even if the supplier has no EU presence. This means that non-EU businesses would have been required, under the normal rules, to register separately and account for VAT in each and every Member State in which they make those supplies. For example, a Canadian business with customers in the UK, France, Germany and Holland would have to register in, and submit declarations to each of those Member States.

In order to simplify the process, a special scheme was created that offers eligible non-EU businesses the option of registering electronically in a single Member State of their choice and account for VAT on their sales of electronically supplied services to all EU consumers on a single quarterly electronic VAT declaration which provides details of VAT due in each Member State. It's called the Mini One Stop Shop (MOSS). The return is submitted with payment to the tax administration in the Member State of registration which then distributes the VAT to the Member States where the services are consumed. Those businesses are issued a VAT number that starts with EU rather than the 2 letter code of the European country where they are registered.