VAT Law in the EU has Changed in 2015
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EU VAT regulations have changed this year. Does the new law affect your business?
As of January 2015, EU VAT rules concerning telecommunications, broadcasting, and electronics services have changed significantly. Under the new rules, the place of supply of these services is the place where the consumer is located. Under the previous system, the place of supply was the place where the supplier was located.
The new law means that certain e-businesses are required to account for VAT in every EU Member State where they provide their services. Before the law changed, those businesses accounted for VAT in the Member State where they were established.
The purpose of the change is to close a loophole whereby e-businesses could locate in countries with lower VAT rates in order to offer lower prices to consumers in countries with higher VAT rates. Exploitation of this loophole would have lowered the VAT take in countries with higher VAT rates.
What does this mean for my e-business?
If you provide telecommunications, broadcasting, or electronic services to consumers in EU Member States, you are now obligated to account for VAT in every EU Member State where you supply these services. This rule also applies to businesses located outside the EU.
Of course, being required to register and account for VAT in multiple countries is not exactly convenient. Fortunately, resources have been made available to help businesses adapt to the new rules. The Mini One Stop Shop (MOSS) is an optional scheme aimed at helping businesses to account for VAT due in EU Member States where they do not have an establishment. It provides a web portal to facilitate this process.
For more information about the new rules and whether they apply to your business, as well as about MOSS, see this detailed guide from the European Commission. If your business is based in Ireland, see also this leaflet from Revenue.