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VAT and cross-
border retailing
A changing landscape
Why worry?
 Risk
 Financial
 Reputational
 Cost
 Potential loss of margin
 Retrospective liabilities
 Time
 Not adding value to your business
 “Hindsight is a wonderful thing”
Putting it in context
 +100 countries…and growing
 Varying complexity (compare UK to (eg)
NZ)
 Huge variation in rates (0% -> 27%)
 Constantly moving goalposts
 A true “single market”?
Trigger points
 Goods or services?
 How do goods move? (Drop ship? Call off
stocks? Etc)
 Supply flow: Direct sales? Via agent?
Reseller?
 Effect of VAT rate on pricing/margin?
 Factor in cost of compliance
Cost of non
compliance?
UK Retailer selling goods
to non-EU customers
 Scope for zero-rating
 Must be exported to a place outside EU
 Proof of export essential:
 Official
 Commercial
 Scope for monthly returns?
 Obligations in destination country?
UK Retailer selling goods
to customers in other EUMS
 B2B or B2C?
 B2C
 ‘Default’ position -> UK VAT applies
 Beware Distance Selling rules (£35k ‘warning
light’)
UK Retailer selling digital
services to other EUMS
 B2B or B2C?
 B2C
 From 1 Jan 2015 – must account for VAT in
customer’s EUMS
 Register separately in each country? Or,
 MOSS?
What services are affected?
Applies to “broadcasting,
telecommunications and
electronically supplied services”
Where sold B2C to customer in
another EUMS
“Electronically supplied services”
includes:
 Web-hosting
 Distance learning packages
 Music downloads
What’s changing?
Pre 1 Jan 2015
UK -> UK: UK standard
rated
UK -> EU: UK standard
rated
UK -> non-EU: Outside
scope
From 1 Jan 2015
UK -> UK: UK standard
rated
UK -> EU: VAT due in
customer’s MS
UK -> non-EU: Outside
scope
How do you account for VAT?
Option 1
Register for VAT in
every EUMS where
sales made
Option 2
Register under MOSS
MOSS
 Single VAT registration
 Online via HMRC’s website
 Box for each EUMS:
 Account for VAT on sales
 Per country
 At prevailing local rate
MOSS Pros and Cons
+
 Administrative ease
 Single online return
 Completed in
English
-
 No turnover limit
 10 year retrospective
audits
 Fixed periods
 No recovery of in-
country costs
Practical issues
 Identification of customer location
 HMRC guidance
 Up to 3 pieces of commercial evidence
may be required
 Pricing/margin
 Systems issues
Refunds of overseas
VAT
 EU -> 8th Directive
 Process:
 Time limits
 Non-EU
 Limited scope
 Check on country by country basis
Checklist
 Ensure transactions are taxed:
 In right place
 At right time
 At right rate
 Ensure systems are VAT-compliant
 Deal with EU statistical obligations
 Retain proof of export/proof of customer
status
 Consider claiming refund of non-UK VAT
Contact
details
vat@taxadvicedirect.co.uk

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Vat and cross border retailing ukti external nov 14 (2)

  • 1. VAT and cross- border retailing A changing landscape
  • 2. Why worry?  Risk  Financial  Reputational  Cost  Potential loss of margin  Retrospective liabilities  Time  Not adding value to your business  “Hindsight is a wonderful thing”
  • 3. Putting it in context  +100 countries…and growing  Varying complexity (compare UK to (eg) NZ)  Huge variation in rates (0% -> 27%)  Constantly moving goalposts  A true “single market”?
  • 4. Trigger points  Goods or services?  How do goods move? (Drop ship? Call off stocks? Etc)  Supply flow: Direct sales? Via agent? Reseller?  Effect of VAT rate on pricing/margin?  Factor in cost of compliance
  • 6. UK Retailer selling goods to non-EU customers  Scope for zero-rating  Must be exported to a place outside EU  Proof of export essential:  Official  Commercial  Scope for monthly returns?  Obligations in destination country?
  • 7. UK Retailer selling goods to customers in other EUMS  B2B or B2C?  B2C  ‘Default’ position -> UK VAT applies  Beware Distance Selling rules (£35k ‘warning light’)
  • 8. UK Retailer selling digital services to other EUMS  B2B or B2C?  B2C  From 1 Jan 2015 – must account for VAT in customer’s EUMS  Register separately in each country? Or,  MOSS?
  • 9. What services are affected? Applies to “broadcasting, telecommunications and electronically supplied services” Where sold B2C to customer in another EUMS “Electronically supplied services” includes:  Web-hosting  Distance learning packages  Music downloads
  • 10. What’s changing? Pre 1 Jan 2015 UK -> UK: UK standard rated UK -> EU: UK standard rated UK -> non-EU: Outside scope From 1 Jan 2015 UK -> UK: UK standard rated UK -> EU: VAT due in customer’s MS UK -> non-EU: Outside scope
  • 11. How do you account for VAT? Option 1 Register for VAT in every EUMS where sales made Option 2 Register under MOSS
  • 12. MOSS  Single VAT registration  Online via HMRC’s website  Box for each EUMS:  Account for VAT on sales  Per country  At prevailing local rate
  • 13. MOSS Pros and Cons +  Administrative ease  Single online return  Completed in English -  No turnover limit  10 year retrospective audits  Fixed periods  No recovery of in- country costs
  • 14. Practical issues  Identification of customer location  HMRC guidance  Up to 3 pieces of commercial evidence may be required  Pricing/margin  Systems issues
  • 15. Refunds of overseas VAT  EU -> 8th Directive  Process:  Time limits  Non-EU  Limited scope  Check on country by country basis
  • 16. Checklist  Ensure transactions are taxed:  In right place  At right time  At right rate  Ensure systems are VAT-compliant  Deal with EU statistical obligations  Retain proof of export/proof of customer status  Consider claiming refund of non-UK VAT