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There are, in addition, a significant number of other VAT proposals being debated by the Member States (MS) that will affect UK businesses doing business with the EU, including: In most of the literature so far on the VAT consequences of the UK leaving the EU, the focus has been very much on the supply of goods and their movement between Great Britain (GB), Northern Ireland and the EU. The EU and the UK have reached a trade agreement on the brink of 2021. VAT rules are not static. supplies of goods, the changes to services are more certain, so businesses can More information on B2B and B2C supplies of services is available in charging VAT on services. This article describes what the rules regarding value added tax (VAT, btw in Dutch) are if you receive services from or render services to the UK. This may be via legal requirements, or commercial planning. 4. In this article, I am going to cover VAT on services after Brexit. Interestingly, Singapore is proposing to introduce a comparable taxing mechanism from 1 January 2023 for non-digital services, subject to a relatively high de minimis threshold. However, some MS, such as Spain, have adopted a ‘use and enjoyment’ test that is applied to business-to-business services, such that they will be subject to Spanish VAT if they are considered to be ‘used or exploited’ in Spain – for example, an advertising service supplied by a Spanish advertiser to a UK company for the latter to advertise and promote sales of goods on the Spanish market. Radio and television broadcasting services. These record-keeping obligations are applied in addition to any EU MS’s own reporting obligations. As we know, the UK will leave the EU on 1 January 2021. for VAT via a, There will be no significant change to, inter alia; land, admission to events, digital and telecoms services which have special rules and fall outside the general VAT rule. Expert guidance and a wealth of technical and practical resources and support you can trust to keep you on top of tax. In this first of two guides, we look at the provision of services from the UK to business customers in the EU. businesses supplying certain services in the UK. There may be an increased Experience insists that there will VAT on services are due in the EU member state in which the customer is a resident for supplies of insurance and financial services to the EU, from 1 January 2021, firms are able to reclaim input VAT related to certain products A This means that EU VAT will be due on all supplies of digital services to EU consumers, regardless of the value of the sales. Business to consumer supplies of a professional, technical and intangible nature. A: At present, UK businesses selling telecoms, broadcasting and digital services (e.g. Any EU businesses in this position 3. 2. VAT charges. apps, computer software, music and video downloads/streaming services, online gaming, ebooks etc.) purchased. Some of these will be beneficial, and some, charitably, will be a royal pain. This means that, for example, a supply that would otherwise be outside the scope of EU VAT is treated as being supplied within the EU, to the extent that the service supplied is effectively ‘used and enjoyed’ in the EU. Where the business customer is located outside the EU, such as the UK post-Brexit, the EU supplier will not charge VAT on its services. It is important to get this right as there could be significant Equally the UK VAT rules will be the same in each particular case as those applicable to a transaction with a non-EU (now non-UK) supplier, customer or consumer. For UK businesses, this now means that VAT is due in the MS of the customer from the first Euro (or equivalent) of turnover! There are, however, important changes to the way in which the EU VAT system operates, as it applies to supplies of services that now (and in the near future) have effect, as far as UK businesses are concerned (including Northern Ireland). b) Distance sales of goods within the EU where the underlying supplier (being the business that is making, contractually, the supply to the consumer) is established outside of the EU. From 1 July 2021, businesses, wherever established, will be required to retain, for 10 years, details of transactions that they have ‘facilitated’, whether for a supply of goods or for services, where the place of the underlying supply is within the EU. On 1 July 2021, European Union (EU) VAT legislation is changing significantly as far as e-commerce is concerned. Box 6 total value of sales and all other outputs excluding any VAT. The Northern Ireland Protocol. VAT MOSS for EU no longer available from 31 December 2020. NB: UK businesses will still be required to apply the reverse charge to services received from the EU as these will be VAT free when purchased. EU VAT and e-commerce changes from 1 July 2021. The platforms will become, in two situations, the person liable to account for VAT on the supply of the goods to the consumer, as follows: a) Importations into the EU of goods from third countries or third territories (including GB) where the goods have an intrinsic value not exceeding €150. New VAT rules now apply for UK businesses trading with businesses in the EU. B2B Services to customers that are based outside the EU or the UK. As can be seen from the above limited examples, UK businesses doing business with and within the EU need to keep fully up to date with the rapidly moving EU VAT legislation and also the case law of the European Union Court of Justice. There are limted changes on the Brexit VAT on services for B2B transactions after the UK leaves the EU VAT regime. 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