Are you Ready for EU VAT Changes?

Digital media providers and online publishers are to be affected by changes to VAT regulations across the European Union from January 2015.

Fundamentally, the reforms impact the place of supply rules for charging and accounting for VAT when the consumer is an individual. The rules around the supply of digital services to businesses are unaffected.

From January 1 2015, VAT on supplies such as broadcasts, telecommunications and other digital services will be charged and accounted for in the Member State where the customer is. Currently the tax arrangements are based on the location of the company supplying the service.

HM Revenue and Customs (HMRC) says the changes will affect all businesses that supply digital services to consumers, whether or not they are registered for UK VAT.

“Any business supplying digital services to a consumer in another Member State therefore has to charge VAT on the supply in that Member State and register for VAT in that Member State,” says HMRC.

For media publishers it almost certainly requires them to register for VAT in all EU countries to account for consumers being resident outside their home territory.

Furthermore, mobile consumption of media content on connected devices means the likelihood of consumers accessing content while in other Member States is highly probable.

Media suppliers, broadcasters and other digital publishers will need an accurate picture of which countries their customers are accessing content.

HMRC notes: “In order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before. You need to start planning for these changes now.”​

MPP Global’s Identity Management, CRM and eCommerce platform, eSuite, enables you to locate individual users so that they are charged the correct VAT rate.

eSuite enables you to log the customer’s location based on their information, which in turn allows you to determine the Tax Region which is applied to the customer’s purchase rather than the location of the company supplying the service.

This change is the final phase of the EU VAT Package, which introduced new place of supply of services rules for VAT in the EU and new intra-EU VAT refund processes. The first phase of the VAT Package came into force on 1 January 2010.