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VAT on electronic files sent to the EU

Hi,

Long shot - in case anybody does something similar.
I have emailed HMRC but god knows when they will reply and whether their reply is intelligible and just directs me to a confusing notice!

We create and sell electronic files (PDF, EPS etc) to customers (mainly B2B). Many customers are solely based outside the UK, in the EU. Does anybody know whether these files should be zero rated as we have left the EU?

Hope this is helpful https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers

Thanks for this. Yes, I went through this article before posting and have emailed HMRC for clarification as it doesn’t clarify the vat situation in my case.

Are you sure? It seems to me it does? Which part is missing for you?

Hi Paul,

Thank you for your reply and am glad you understand it as it has baffled me (am not an accountant). In your opinion, does it mean that in my case I can zero rate these eu based orders or do I need to charge UK vat?

In the past, I have only ever zero rated orders to the eu if they had an EU vat reg number (outside UK).

Thanks very much in advance and appreciate you looking at these messages during your holidays.

Dipen

As I understand it nothing has changed with regard to the general place of supply rules for services - for B2B supplies where the customer belongs outside the UK you don’t charge VAT (and the customer would have to reverse charge on their end), for B2C supplies of services that don’t fall under the rules for “digital services supplied electronically” you charge UK VAT as the place of supply is the UK.

For B2C supplies that do count as electronically supplied digital services you should previously have been using the VAT MOSS system to charge each customer VAT at the local rate for their country. This is the case where the rules have now changed, since you can no longer use the EU VAT MOSS system from the UK. You now need to either register for non Union MOSS in an EU state, or register for VAT in every separate state where you have B2C customers.

So the question is whether your B2C supplies of PDFs count as “electronically supplied” - is it an automatic process or is there manual intervention required such as you manually emailing the PDFs to the customer?

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Hi Ian,

Thanks for this.

The files are currently manually emailed to customers. However, in time we may be automatically sending these out via our system to prevent somebody emailing them.

Thanks
Dipen

Well that guidance document that @FaradayKeynes linked to will tell you what you have to look out for, and it may be worth taking professional advice if/when you start skirting closer to the edge of the MOSS net…

Thank you once again

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