Upcoming changes to the way in which tax in charged is set to have a major impact on the way in which people purchase goods and services digitally across the European Union.
At present, digital sales and services are charged at the national rate where the supplier is – or VAT free if the seller is not VAT registered. Come January 1st however this will all change as new rules are coming in to change the way this works. From 2015, VAT on digital sales – including webinars, app sales and even web services such as design and development – will be charged based on the tax rate of the nation where the purchaser is from, not the seller.
This means, for example, that should a UK provider make a sale to someone in Luxembourg, they would have to charge them the 17% tax rate of Luxembourg rather than the 20% of the UK, and if they were then followed by a purchase from Hungary, the seller would then have to charge them the larger Hungarian VAT rate of 27%. Once payments are taken, they will then have to be delivered to the authorities in each country, this can be done either by VAT registering with all 28 EU countries, or by the much simpler solution of sending it to your UK based VATMOSS (VAT mini one stop shop) who will send it all to the correct nations.
We understand that this has caused considerable panic and issues for some people upon discovery – even more so due to the lack of publicity meaning people are late finding out – however the Dijitul development team are as always hard at work to ensure that this is all dealt with as smoothly as possible in all of our existing customers eCommerce websites.
Issues like this can be very confusing, so if you have any more questions about how this may affect you and your website in 2015 then please do not hesitate to get in touch with our team today on 01623 650333, and we can help you ensure that your online success continues long into the future.