EU VAT changes and Clear Books: an update

News posted by Chris Storey 10 years ago

As you will probably be aware, on 1st January 2015 the way VAT is charged changed for businesses which sell digital services to consumers in EU member countries.

We wanted to give you a brief overview of how we are updating Clear Books to account for these changes.

What the changes are

  • New regulations on VAT on digital services sold to consumers i.e. non business customers in other EU countries
  • Digital services include:
    • E-services: e.g. e-books, software downloads, video on demand, web hosting etc.
    • Broadcasting – television or radio programs
    • Telecommunications
  • The place of supply is now the customer’s country, not the supplier’s country
  • This means you must charge the customer the correct amount of VAT depending on their country
  • You can also claim back UK VAT on purchases related to these services
  • It affects all UK businesses even those not UK VAT registered
  • These services will not appear on UK VAT returns
  • Does not affect: sales to business, non-digital sales, sales within the same country, sales outside the EU
  • VAT MOSS (Mini One Stop Shop) has been set up by HMRC so that businesses don’t have to register for VAT in each individual EU country in which they sell services. VAT MOSS allows you to make one single return, with HMRC allocating the tax to the respective countries. Find out more about registering here: https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop
  • This is only the beginning, as it is intended that the same rules will be applied eventually to all other services and goods sold to EU consumers

What we’ve done already

From 1st January 2015:

  • You can mark an invoice with the “Sales of digital services to EU consumer” VAT treatment and manually fill in the appropriate VAT rate
  • You can set up a VAT scheme for your company as “VAT registered for MOSS only” if you have to register for this scheme but would not be UK VAT registered otherwise

What we’re doing

Before March:

  • VAT rates for the customer’s country will be automatically populated, so you don’t have to enter the rates manually
  • Report of all digital service invoices and submission through Clear Books to HMRC’s VAT MOSS service

For more information on VAT MOSS please see these resources below:

If you have any questions, please leave a comment below or contact our support team by emailing contact support.

Write reply5

5 Replies

Hi. VAT rates - please can you extend the pre-populated dropdown list of VAT rates to include the additional rates applicable in the EU (17%, 18%, 19%, etc plus reduced rates). This would mean that we do not need to manually calculate the VAT for every EU transaction. The relevant VAT rate can then be set in the import rule. We use rules extensively and under the current system had to manually calculate the VAT for every EU transaction. This workaround should be easy to introduce whilst the automatic VAT EU rate facility is being developed. Keith

10 years ago

Hello Keith,

For the current VAT MOSS which is being done, we have already added in the VAT rates of each individual EU member state. An exmaple is shown below.

file

For this to be put live however, we are still doing code review and testing on this to ensure that it is entered accurately.

Hopefully this answers your concerns.

Vanish.

10 years ago

Hi Vanish. Thanks for the update. The screenshot implies that the VAT rates are filtered by the location of the customer. Is this because it is test data or is it a feature? If the rates are filtered will this also apply when import rules are being created? As you know from my posting above and our previous conversations, we use rules extensively due to the volume of transactions we deal with. Keith

10 years ago

Hello Keith,

I have made a guide for this which is outlined in the link. You may need to sign in with Google to view it. https://docs.google.com/a/clearbooks.co.uk/document/d/1Rmt9sztZcjBr3ZnJE4Q4LQDCC4To5umEQBsgw0JtM9M/edit?usp=sharing

For the rates, they will be based on the country you have entered on the customer invoice defaults. They must be entered into the details before the rates will show up.

So, for example, just naming it Italian customer will not suffice for the Italian rates to come up. The customer itself needs to have their country set. This is a requirement for the VAT MOSS submission report which will be added in the future.

There is also the method of just setting up digital customers for each country rather than making each customer individually.

In this case, you will make a customer named "All German digital sales". You set the country to Germany, you set the VAT treatment as Digital services rather than making them individually.

We are looking at adding in the rates on this page but that will be done in the future hopefully.

Vanish.

10 years ago

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