VAT notes on changes to Broadcasting, Telecommunications and Electronic (BTE) services from 1 Jan 2015


With effect from 1 January 2015 there will be a fundamental VAT change for the supply of these services to non-business consumers (B2C).

Currently UK VAT is charged by UK suppliers of these services at the standard UK VAT rate of 20%.

From 1 January 2015 the VAT liability will transfer to the non-business customer’s location within the EC.

This would mean that even for the sale of say a £2 app to non-business customer in another Member State of the EC that VAT registration in the customer’s Member State would often be required as other many of the Member States of the EC have a nil VAT registration threshold for non-established businesses.

There will be a simplification process through a ‘mini one stop shop’ (MOSS) VAT registration to avoid multiple VAT registrations. From 1 October 2014 BTE suppliers will be able to for a MOSS to prepare for the significant changes from 1 January 2015.

There will two MOSS registrations:

a)    For those businesses supplying BTE services to non-business customers that are not established with a EC Member State; and

b)    For those businesses that are established in at least one Member State.

The submission of the MOSS VAT returns will 20 days after the period end and periods are confirmed as calendar quarters.

There are however many difficult scenarios that must be considered and preparation made now (where possible) for accounting and billing systems with regards to:

•    Different VAT rates that will apply for BTE services as these can range currently from 3% to 27%. Some Member States are also currently challenging certain VAT rates for certain BTE services, such as e-books;

•    Due to the above there will be a significant issue with regards to pricing and supplying a single VAT inclusive price for BTE services;

•    If difficulties arise with submission of certain sales specific to an individual Member State then this will require communication between the UK supplier and the relevant overseas VAT authority;

•    It will be necessary to establish the location of the non-business customer. Generally this will be established by way of the registered debit or credit card used or other payment processing system, and any address required to be supplied. However, there will be addition difficulties with regards to certain BTE services supplied through wi-fi hotspots, mobile phones, hotels, and people on board transport travelling between Member States. Therefore in some cases the delivery method of the BTE service must be considered first before the default position of using the following evidence:

o    The non-business customers billing address;
o    Their bank details; and
o    Their IP address.

There is also the matter of identifying what is a non-business customer. If a customer does not provide you with a VAT registration number and there is no other information that suggests the customer is in business then this should be treated as a B2C supply. A suggestion here is that websites must clearly request that VAT numbers are provided or if these are not available that the customer identifies that they are in business and will be receiving the BTE supply for a business purpose.

Remember that B2C customers are not just private individuals but can be charities or other organisations that have no business activities.

Should you require assistance with your preparation for these changes or have any questions then please do not hesitate to contact your usual partner.

Documentation: