VAT on Broadcasting, Telecommunication and Electronically ...changes+-+1+Jan+15.pdf · –Most B2C supplies to EU customers are subject to VAT where the supplier belongs –“Use

VAT on Broadcasting,

Telecommunication and

Electronically provided services

2015 Changes

20 August 2014

@KSTechnology #askKS

Jan 2015 VAT changes

� The 2015 changes for BTE supplies to consumers– Geraint Lewis VAT Principal

� Accounting for VAT in other EU States– Adrian Houstoun VAT Partner

BTE Services From 2015

PART 1

BTE Services To Consumers

Geraint Lewis

VAT Principal

1 Jan 2015 changes: History

� Jan 2010 and Jan 2011 saw the EU address the VAT treatment of cross border B2B supplies

� 1 Jan 2015 will see EU wide introduction of new regime for the VAT treatment of cross border B2C supplies for broadcasting, telecommunication and electronically supplied services (BTE)

� Intention is VAT being a consumption tax that revenues should go to the Member State in which goods or services are consumed

1 Jan 2015 changes:

So how does that work?

B2C supplies current treatment– Most B2C supplies to EU customers are subject to VAT

where the supplier belongs

– “Use and enjoyment provisions”, although difficult to

enforce

– Special rules for property related and certain other

services

– Special regime for non EU suppliers of electronic

services


EU Business

Sells to

EU private

Consumer

Change

1 Jan

2015

Now

VAT due

By Vendor

At VAT Rate of

Vendor’s State

From 1 Jan

2015

VAT due

By Vendor

At VAT Rate of

Buyer’s State


British

Customer

Hungarian

Customer

Nigerian

Customer

British

Supplier

Taxable in GB

20%

Taxable in

Hungary 27%

Outside the

scope

Hungarian

Supplier

Taxable in GB

20%

Taxable in

Hungary 27%

Outside the

scope

Nigerian

Supplier

Taxable in GB

20%

Taxable in

Hungary 27%

Outside the

scope


� BTE Services– Broadcasting (Easy to define)

– Telecommunications (Easy to define)

– Electronically supplied services (More difficult to define?)

� Supplied to consumers

� No change to supplies of such services to business customers


� What are electronically supplied services

� VAT Directive 2006/112/EC contains a basic list1) Website supply, web-hosting, distance maintenance of programmes and equipment;

2)Supply of software and updating thereof;

3) Supply of images, text and information and making available of databases;


4) Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events

5) Supply of distance teaching


� Art 7, Council Implementing Regulation 282/2011 provides further assistance

– services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology


� At the 67th Meeting of the EC VAT committee a list of 29 items of electronically supplied service was agreed by all member states including

– The digitised content of books and other electronic publications

– Subscription to online newspapers and journals

– Online information generated automatically by software from data input by the customer such as legal data or stock market data

– Provision of advertising space e.g. banner ads on a website


– Accessing or downloading of music onto PC’s, mobile phones, and so on

– Accessing or downloading of jingles, excerpts, ring tones, or other sounds


� Live webinar is provided which is run by a presenter

� Electronically supplied service or not?

� The webinar is recorded and available to purchase with slides and a voiceover

� Electronically supplied service or not?


� Help desk services unlikely to be a BTE services due to human intervention


� Whereas price comparison sites would be BTE if a consumer pays a fee for its use whereas the main supply e.g. insurance, or goods would be subject to the usual rules

Assessing whether or not your

customer is a consumer

� If a customer does not provide a VAT number can I assume he is not in business?

� Council Imp Reg 282/2011 Article 18 (2)

� Solely down to supplier to determine the VAT status of the supply

Evidence of Place of Supply

� Billing address of customer

� IP address of device used by customer

� Location of the bank

� Country code of SIM used by customer

� Location of customer’s land line through which service is supplied

� Product coding which electronically links to the supply

Annual Subscriptions –

Transitional rules

� If an annual subscription is paid in 2014 old rules apply

� If an annual subscription is paid monthly – those paid before 1st January 2015 old rules, thereafter new rules

Are your IT Systems Ready

� At present most businesses’ systems will have a default VAT charge of 20%, from Jan will need to be able to manage multiple rates.

� How will this impact pricing, do you charge different amounts in different countries?

� Most will credit output tax to a VAT account, but how will you account for non-UK VAT?

� Your staff and your system will need to deal with multiple rates, possibly different currencies and different rules!!!!

� Only UK output tax should be credited to the HMRC VAT account


� For registrations in other member states you will need multiple VAT accounts

� Alternatively if you use MOSS (more later) you will need an HMRC VAT account, a MOSS VAT account, and a VAT account for all other EU countries where you are VAT registered


� Questions

Part 2

Accounting for VAT in other EU States

Adrian Houstoun

VAT Partner


� Accounting for VAT

� Two Options– Register for Vat in every state in which you have

consumers of your BTE services; or

– Register for Mini One Stop Shop

From 1 Jan

2015

VAT due

By Vendor

At VAT Rate of

Buyer’s State

MOSS

� Mini One Stop Shop (MOSS)

� Two Schemes

� Union Scheme for businesses established in a member state

� Non Union scheme for those outside EU – Replaces VoES scheme (VAT on e-services) which will

be done away with after a short while

MOSS

� MOSS requires registration in your home or main EU state – MSI

� Once registered you have to use it for all B2C supplies in every state – cannot pick and choose

� Main Legislation– Council Directive 2006/112/EC

– Council Regulation No 904/2010

MOSS

� Main Legislation– Council Regulation No 967/2012

– UK – Finance Act 2014 Sch 22

MOSS

� If established in EU register with that member state

� If not established in EU but have a fixed establishment in EU register with that member state

� If more than one fixed establishment in the EU –choose which of those member states

� State where you register will become your Member State of Identification (MSI)

MOSS Non-Union Scheme

� For a taxable person who has neither a business establishment nor a fixed establishment, nor is registered or otherwise obliged to register, in the EU it can choose any member state to be the MSI

� It will be allocated a VAT identification number in the form EUxxxyyyyyz

MOSS

� Registration form– Which cannot be submitted by an agent

� Early attention required

� Moss quarters are calendar quarters

� Taxable person informs the MSI that it wishes to use the scheme

– For example apply in February 2016 - Registered for MOSS from start of next quarter i.e. 1 April 2016

– What happens to a supply you made in February or March 2016?

MOSS

� If you notify by 10th day of following month (10th

March 2016) you will be registered for Moss from 16th February 2016

� Registration procedures will be available from 1 October 2014

MOSS Returns

� MOSS returns are for calendar quarters

� Online submission to VAT authority of MSI– Agents can submit returns

� Details all B2C supplies of BTE services to each member state

– Return split by member state

� Each return has a unique number – important for payment purposes

MOSS Returns

� Return due 20 days into following month– i.e. 20th April, 20th July, 20th October and 20th January

� You VAT staff will have an extra work load, for example for the quarter to 31st March 2015

– they will be dealing with the MOSS return up to 20th

April,

– Then have 10 days to deal with the UK return which for large traders is due by 30th April

MOSS Returns

� No change to due date if it’s a public holiday or a weekend day

� Penalties and charges for late submission fall under the competence of the MSC

MOSS Returns

� Example: Kingston Smith has its head office in UK and it has fixed establishments in France and Belgium

� Its head office supplies B2C BTE supplies to consumers in France and Germany

� Kingston Smith declares its supplies in Germany via its MOSS return

� It declares its supplies in France via the domestic return of the French establishment

MOSS Returns

� Required on the return is the VAT rate of the MSC and the reduced VAT rate of the MSC

� These will be available on Commission’s website

DG TAXUD (Directorate General for Taxation and Customs Union)

� Not yet posted

� Exempt supplies are not included on the return

MOSS Returns

� Part 1 unique reference number for that VAT return

� Part 2 Information re MSC– 2a MSI information union and non-union scheme

– 2b Union scheme only relates to supplies made to particular MSC’s by fixed establishments in other member states

– 2c Union scheme grand total of all supplies from all establishments to that MSC

MOSS Returns

� For example, if a taxable person makes supplies in three member states of consumption, he will be required to complete Part 2 of the MOSS VAT return three times

MOSS Returns

� A MOSS return is solely for output tax

� A MOSS return affords no recovery of input tax incurred

� If you issue a credit note in a later quarter you have to file an adjustment to the return for the quarter in which the invoice was raised/declared

� Agents can submit returns in accordance with the rules of the MSI

MOSS Return Payment

� Payment due on or before 20th day of following month

� Failure to pay on thee occasions will result in exclusion from MOSS and the requirement to register in every MSC

� Penalties are under the MSC rules and regulations

Place of Supply Presumptions and evidence for your MOSS return

� For certain digital services there are presumptions about where the supply is received, services are supplied

� Through a telephone box, a telephone kiosk, a wi-fihot spot, an internet café, a restaurant or a hotel lobby – Where the telephone box/kiosk is located


� On board transport travelling between countries in the EU – Place of departure


� Through a consumer’s telephone landline – Where the landline is located

� Through a mobile phone – Country code of SIMcard

� Through a decoder – The postal address where the decoder is sent or installed


� Where a presumption applies only one piece of evidence is required

� If you rebut the presumption you will need to keep three pieces of non-contradictory commercial evidence

� For digital services not on the above list you will need to keep two pieces of non-contradictory commercial evidence

IT Systems and MOSS

� At present the French and Spanish MOSS VAT return system calculates the VAT payable after submission of the product value and the country code

� It is likely that the UK MOSS will operate the same way

� You may make a supply in France in January 2015 and charge a VAT rate you believe to be correct, but when you come to enter your MOSS VAT return for the quarter to 31st March 2015 the system may calculate a different amount of VAT

IT Systems and MOSS

� However HMRC say that you will be able to overwrite the ‘VAT payable’ figure prior to submitting the MOSS return

� Plenty of teething problems in the pipeline

� The guidance notes are currently available from several different sources and there are inconsistancies

Exchange Rates

� Accounting and payments are to your MSI in MSI’scurrency for us pounds sterling

� If you invoice a consumer in a different currency you have to convert using European Central Bank rates for the last day of the quarter

� For example a UK supplier invoices a consumer in Denmark in Krone, he will convert it into sterling using quarter end exchange rate from ECB

� You must not use daily rate for conversion

MOSS Records

� MOSS records must be kept for 10 years from the end of the year in which the transaction was made, regardless of whether or not they have stopped using the scheme

MOSS Records

� Article 63c EU Regulation 967/2012 requires the following to be kept

� The MSC to which the service is supplied

� The type of service supplied

� The date of the supply of service

� The taxable amount indicating the currency used

� Any subsequent increase or reduction in consideration

� The VAT rate applied

MOSS Records

� The amount of VAT payable indicating the currency used

� The date and amount of payments received

� Any payments on account before the time of supply

� Where an invoice is issued the information on the invoice

� Where known the name of the customer

MOSS Records

� The information used to determine the place where the customer is established or has his permanent address or usually resides

Penalties

� MSC has the legal right to audit a MOSS businesses’ records

� Most states signed up to an audit code to try and prevent say France auditing you one month, and then Germany and then Portugal in quick succession

� Normally MSI tax authority will conduct inspection on behalf of MSC tax authorities

Penalties

� MOSS records must be kept for 10 years from the end of the year in which the transaction was made, regardless of whether or not you have stopped using the scheme

Supply at Hotels and similar

locations

� Where BTE services are supplied in the hotel sector the status of the customer and where he belongs can be difficult to ascertain

� Article 31c alleviates this problem

� When BTE services are supplied with accommodation by the same person the place of supply is where the accommodation is

� Are you prepared?

� Questions

� Networking

Thinking of doing business in

the USA?

� Join us for our next seminar

� 5pm – Thursday 18 September

� For more information visit our website

www.ks.co.uk/events

Documents

VAT on Broadcasting, Telecommunication and Electronically ...changes+-+1+Jan+15.pdf · –Most B2C supplies to EU customers are subject to VAT where the supplier belongs –“Use