VAT on electronic services

Selling electronic services, such as ebooks to non-business customers in other EU countries, can cause complications for VAT.

The rule for e-services is that you should account for VAT at the rate due where your customer is based. The rate of VAT due on digital publications has been reduced in many EU countries this year, so check out the appropriate VAT rates published on gov.uk.

You should report and pay the VAT charged through the VAT MOSS system accessed through HMRC’s online VAT service. However, since 1 January 2019, if you sell less than £8,188 per year of electronic services across EU borders you don’t have to charge VAT at the local rate for your customer and you don’t have to worry about VAT MOSS reporting.

When the UK leaves the EU and if no other arrangements are then in place (nodeal Brexit) the VAT MOSS exemption will immediately fall away as the UK will be a non-EU country. Many UK businesses which have used the turnover exemption from VAT MOSS from 1 January 2019 will be pulled back into that regime.

If your business is still registered for VAT MOSS, that registration will be cancelled automatically from the day after the UK leaves the EU, unless other arrangements have been put in place to extend that system to non-EU countries.

Where you continue to make sales of electronic services to non-business customers in EU countries after the UK leaves the EU, you will have to re-register for VAT MOSS as a non-EU business in an EU country (i.e. not in the UK).