VAT changes to broadcasting, telecommunications and electronic services from 1 January 2015
Changing VAT Rules: Place of Supply of Electronically delivered Services
With effect from 1 January 2015 there are significant VAT changes being introduced which will change how VAT will be accounted for on broadcasting, telecommunications and electronic services (‘BTE services’) supplied to private consumers (‘consumer/s’) in EU member states other than the UK (‘the EU’). These changes will not only require businesses to be compliant with the new VAT rules but in addition will require system and IT changes, consideration of the impact on pricing, revenue, profit and margin plus not forgetting the customer experience and business reputation. Any business providing BTE services to consumers in the EU need to start planning for these changes now.
What are the changes?
There are 2 changes:
- Currently BTE services supplied to consumers in the EU are taxed where the supplier is established, from 1/1/15 such supplies will be taxed where the consumer is located.
- In terms of accounting for VAT the supplier will have the following options:
- Register and account for local VAT in every EU country where it supplies BTE services, or
- Use the VAT Mini One Stop Shop online service (‘VAT Moss’) to submit a single VAT return and payment covering the BTE supplies.
What services are included in BTE?
There is no definitive list but the following are a number of examples:
Radio and TV programmes; live broadcasts over the internet.
Fixed and mobile phone services; video phone services; access to the internet.
These are characterised by being delivered over the internet or an electronic network and being heavily dependent on information technology. Essentially, the services will be automated and involve minimum human intervention. Some examples include downloaded applications (‘apps’), website supply and web hosting services, e-books, distance maintenance of programmes and equipment and the supply of music, films and games.
South African Compulsory VAT Registration Requirement for Electronic Services
The South African authorities have announced that they will seek a compulsory VAT registration in country for foreign electronic services suppliers making such supplies into South Africa whether that’s to business of private consumers. The change is effective from 1 April 2014 where any supplies exceed the annual threshold of R50,000 ( approx. £2750). The current South African VAT rate is 14%.