EU VAT - Understanding European Tax The 2015 VAT changes for eservices are part of a special VAT scheme for nonEU businesses providing electronically supplied services to EU consumers (that is, private individuals and nonbusiness organisations). The scheme provides an optional, simplified means of registering and accounting electronically for EU VAT with effect from July1, 2003. To prevent the need for such nonEU businesses registering in every EU member state where they supply customers, this special scheme allows them to register and account for EU VAT in a single EU member state of their choice.
The scheme does not apply to supplies to business customers in the EU – there is a new directive regarding EU based eservice providers coming into effect on January 1, 2015.
1.INTRODUCTION: This information provides further information about the Special Scheme for nonEU businesses supplying electronically supplied services to EU consumers (that is, private individuals and nonbusiness organisations).
The Special Scheme provides an optional, simplified means of registering and accounting electronically for VAT that is due in the EU with effect from July 1, 2003, following implementationof the VAT On ECommerce Directive. 2. LAW (PDFversionhere): Section 3A and Schedule 3B of the VAT Act 1994 provide for the Special Scheme. They implement Article 26c of the EC Sixth Directive, added by Article 3 of the VAT on E Commerce Directive (Co.Dir.2002/38/EC). 3.REGISTRATION FOR THE
SPECIAL
SCHEME:
If you apply for the special scheme, you are required to comply with its conditions. These include electronically registering, accounting for, and paying the VAT that is due at the correct time. There are no penalties which apply under the special scheme. However, if you persistently fail to comply with its conditions, your registration may be cancelled. In that event, you would be required to register under the normal rules which apply in the various member states where your customers belong. You could then be subject to any penalties which those member states apply. In the UK this includes the misdeclaration penalty for large or repeated errors, interest charged on underdeclarations and the penalty for evasion involving dishonesty. If you are supplying eservices to UK consumers and fail to register for VAT (either under the special scheme or under the normal rules), you may be compulsorily registered in the UK under the normal rules and may incur a late registration penalty. This varies from between 5% to 15% of the tax due, according to how late you were in registering.