Thousands of UK businesses supplying digital services across the European Union (EU) will be able to register for a new online VAT service from 20 October.
Signing up to the VAT Mini One Stop Shop (VAT MOSS) means they will not have to register for VAT separately in each EU member state where they do business.
The digital services affected include most types of broadcasting, telecommunications and e-service supplies, such as telephone services, supplies of music, films and games and downloads of apps, images, text or other information.
From 1 January 2015, the place of supply, and therefore taxation, of EU business-to-consumer supplies of digital services will change. Currently the place of taxation is where the supplier is established but from January it will be where the consumer lives.
Sally Beggs, deputy director of indirect tax at HM Revenue & Customs (HMRC), said: “The VAT MOSS will save digital services suppliers from having to register for VAT in every member state where they do business, removing a significant administrative burden. Businesses with their main operation or headquarters in the UK will register with HMRC to use the service.”
Between 27,000 and 42,000 UK businesses are expected to register for VAT MOSS, which will go live on 1 January.