On 1st January 2015, the final VAT Package changes came into effect and EU established suppliers of telecoms, broadcasting and electronic services (TBES) are now required to change the way VAT is accounted for on B2C supplies.
This change will level the playing field for EU established businesses and bring the VAT treatment in line with that already applied by non-EU providers of similar services.
The new rules will require careful adoption by companies. Failure to comply could result in fines and penalties from tax authorities across the EU. The aim of Accordance’s 2015 VAT MOSS Compliance Assessment is to assist businesses to make the transition to the new framework in a comprehensive and commercially sensible way. The assessment will, in particular, attempt to identify the most cost effective way of meeting the new obligations whilst preventing any disruption to your sales.
Key areas of change
- The place of supply for VAT purposes has shifted from the country of establishment of the supplier to the country of the consumer.
- This means that instead of charging a single rate of VAT for sales to private individuals, businesses have to charge VAT at the rate of the EU country in which their customer is located
- The shift to collecting VAT based on where the consumer is located would normally require businesses to register and charge VAT in each country which supplies are made to consumers
- To avoid multiple registrations, the ‘Mini One Stop Shop’ (MOSS) allows businesses to have a single VAT registration in the Member State of establishment
- VAT should be charged at the applicable rate of each country and declared via MOSS online. A single payment is also made through the system and this is then remitted to the relevant Member States.
- The VAT rules for business-to-business supplies will remain unchanged.
Key VAT issues for businesses
- Are the supplies your business makes be affected by the changes?
- It will be necessary to consider whether the MOSS should be used or whether the business should register in the EU Member State as a non-resident business. Companies with establishments in other EU Member States or existing cross-border VAT registrations will need to consider how these affect its use
- Invoicing procedures need to be modified to account for differing B2C invoicing rules across the EU. It will be necessary to work out which VAT rate to apply according to local country rules
- The MOSS will report a business’s sales in up to 27 EU Member States. Businesses will need to consider whether existing resources will allow for this to be compiled and reviewed
- It may be necessary to review pricing structures and whether these should be altered to account for different VAT rates
- It may be necessary to implement processes to prove where customers are located when consuming services, especially where ‘use and enjoyment’ rules are applicable
- ERP VAT coding will need to be updated to fall into line with new regulations
- Businesses will need to consider how any EU VAT can be recovered as this is not possible through the MOSS
Aims of Accordance’s TBE Services MOSS compliance assessment
- The Assessment will consider all the compliance issues raised by the 2015 changes in relation to the particular circumstances of the business examined.
- We can provide a detailed guide for how clients can make their businesses compliant with new rules
Because firms have different levels of exposure to the 2015 VAT changes, we are flexible about the structure of the assessment:
- Reviews can range from delivering an overview of changes clients will need to make to become 2015 compliant
- Providing step-by step assistance with cross-border transaction analysis
- ERP VAT code updating
- MOSS reporting
- Formulation of cross-border recovery procedures