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For UK businesses, HMRC advises you to write in individually to explain your business model and clarify your business’s status.
For businesses outside the UK, we would urge you to seek clarification from your own tax office and / or government.
The European Commission argues that this will create a level playing field, because it means that sellers can’t undercut their competitors unfairly by using a lower VAT rate.
However, because there’s no threshold, it actually disadvantages the smallest companies and individual traders.
At present, many of them will not even supply you with the relevant data you require to comply.
The EU VAT Action Campaign Facebook group has a growing list of compliant and non-compliant platforms which you can use as a guide.
DISCLAIMER: The information in this page is for general guidance only and does not constitute legal or accounting advice.
Please contact an accountant or your local tax authority for more information. | I’m digging deeper: FAQs| The rules apply to me: What now? More details on defining “automated digital services” The law was originally designed in 2008 to stop to billions of euros of consumer tax being lost due to multi-nationals setting up in low-tax jurisdictions – an aim which few would argue with.
For EU businesses, refusing to sell to other EU customers may be a breach of EU anti-discrimination law: “Because of a protected characteristic, you and anyone working for you must not refuse to serve someone or refuse to take them on as a client” (page 12).
Bespoke work is not essentially automated and involves more than minimal human intervention. The EU guidelines make it clear that these are included, in their examples on pg 85 onwards: “(a) the supply of digitised products generally, including software and changes to or upgrades of software; (b) services providing or supporting a business or personal presence on an electronic network such as a website or a webpage; (c) services automatically generated from a computer via the Internet or an electronic network, in response to specific data input by the recipient” Nothing here indicates that the new rules only apply when ownership is transferred. The UK tax office, HMRC, originally gave conflicting advice on this. The Netherlands tax office has given conflicting advice on this to different individuals.
Their most recent guidelines () say a PDF document manually emailed by the supplier is not covered by the new rules, while an automated email is (even if you manually click send). (This information is based on advice given to individuals, so we don’t have an official source to link to.) The other 24 countries’ positions aren’t yet known. File-size limit means some files can’t be emailed and the inevitable delay (especially across time zones) has led to unhappy or angry customers for some suppliers.
Most micro businesses and sole traders (and even their accountants) are not up-to-speed with the new legislation.
One of the difficulties in compiling these key facts is that we are getting reports that different countries are interpreting and applying the rules differently.