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Hello,
I am starting a UK-based limited company operating in the field of web hosting (considered as a digital service if I am not mistaken). I did some searches and understood that I need to:
– Register for UK VAT (Optionally OR necessarily if the VAT taxable turnover goes over £85,000).
– Register for Non-Union VAT MOSS scheme in an EU member state (Necessarily since the £8,818 threshold is no longer valid). It used to be called “VAT MOSS in the UK” but it is no longer valid after Brexit.- Please correct me if I missed any details.
- And is there any other VAT schemes for other countries/regions I need to apply for when providing services internationally?
Your help will be appreciated. Thank you.
Hi,
You are correct about the registration threshold – bear in mind that it relates to a rolling 12 months (rather than your normal financial/tax year), and you will need to register immediately at any point when you believe that your turnover in the next 30 days alone will exceed the threshold. There may be benefits to registering voluntarily – for example if a significant proportion of your customers are VAT registered businesses that can reclaim the VAT on their costs.
Turnover from your UK based customers will count towards the £85k, turnover from your customers based abroad will not. But what does also count towards the £85k is the value of services that you buy from outside the UK (where the place of supply is deemed to be the UK) – this is because you would be required to account for the VAT on these if you were registered. For example, are you using your own data centres/servers based in the UK or buying-in from overseas?
Technically an alternative to the non-union MOSS is to register for VAT in each member state where you have customers … but the non-union MOSS would likely be the easier option if you’re dealing with customers in multiple countries.
The following HMRC guidance relating to digital services may be useful, if you haven’t already found it: https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers#the-place-of-supply-of-digital-services
Remember that this all only covers UK/EU customers – many other countries have VAT or similar taxes which you may have obligations under once you have customers there.
Particularly given that you’re only just starting this business, I would suggest that it’s worth going through your plans in detail with a VAT advisor. They will be able to ensure that you have processes in place which are both compliant and efficient. Going forward, they will also be able to keep you informed of any future changes that may affect you.
Hope this helps!
Quote:Hi,You are correct about the registration threshold – bear in mind that it relates to a rolling 12 months (rather than your normal financial/tax year), and you will need to register immediately at any point when you believe that your turnover in the next 30 days alone will exceed the threshold. There may be benefits to registering voluntarily – for example if a significant proportion of your customers are VAT registered businesses that can reclaim the VAT on their costs.
Turnover from your UK based customers will count towards the £85k, turnover from your customers based abroad will not. But what does also count towards the £85k is the value of services that you buy from outside the UK (where the place of supply is deemed to be the UK) – this is because you would be required to account for the VAT on these if you were registered. For example, are you using your own data centres/servers based in the UK or buying-in from overseas?
Technically an alternative to the non-union MOSS is to register for VAT in each member state where you have customers … but the non-union MOSS would likely be the easier option if you’re dealing with customers in multiple countries.
The following HMRC guidance relating to digital services may be useful, if you haven’t already found it: https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers#the-place-of-supply-of-digital-services
Remember that this all only covers UK/EU customers – many other countries have VAT or similar taxes which you may have obligations under once you have customers there.
Particularly given that you’re only just starting this business, I would suggest that it’s worth going through your plans in detail with a VAT advisor. They will be able to ensure that you have processes in place which are both compliant and efficient. Going forward, they will also be able to keep you informed of any future changes that may affect you.
Hope this helps!
Hello,
Thank you for taking the time to give a detailed explanation! This definitely clears my doubts.
I will follow your advice and consult with a VAT advisor.
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