Updated rules post-Brexit for non-resident providers of electronic services to UK consumers
The UK introduced Value Added Tax obligations on foreign providers and marketplaces of electronic or digital services to consumers from 1 January 2015. This was part of the EU’s Mini One-Stop Shop MOSS reporting regime. The UK left this regime at the end of 2020, the ending of its Brexit transition period.
Foreign providers and facilitating marketplaces generally must register with HMRC in the UK when selling e-services locally. There is no VAT registration threshold available – provider must register immediately. There is no requirement to appoint a Fiscal Representative.
Check our global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers.
What digital services are subject to UK VAT?
The UK still follows the broad EU definitions if telecommunications, broadcast and electronic services (TBE) for VAT. This includes income from the following services:
- Broadcast radio and TV, including linked live streaming
- Fixed and mobile voice and data telecoms, including internet access
- Voice over IP services
- Images, PDFs, messaging, photos etc
- Streaming or download media
- Online journals
- Website supply or hosting
- Advertising on websites
- SaaS, cloud or download software
Determining if UK VAT is due
Any provider or marketplace must determine if the customer and / or consumption takes place in the UK – triggering the VAT liability. In the first instance, providers may assume UK VAT (‘presumptive’) where access is via:
- UK telephone number used for access (WiFi, telephone box, etc)
- Consumer telephone line
- UK SIM card
- Postal address of decoder
If they cannot access this, then alternatively, they may use any of the following evidence:
Customer billing address
- IP address
- Bank account details
- SIM country code
- Customer land line number
- Any other commercial information
B2B supplies of digital services
When non-resident providers of digital services supply to UK resident businesses, they should not charge UK VAT. Instead, they should zero-rate the invoice under the reverse-charge rules and allow the UK customer to report the transaction to HMRC.
Digital services UK VAT registration and compliance
The UK does not provide a simplified digital services registration process. It requires any foreign business to apply in the normal manner. This does mean UK VAT incurred may be reclaimed. However, a Fiscal Representative is not required.
VAT returns are generally completed on a quarterly basis. Returns and payments of VAT collected are due by the 7th of the second month following the reporting quarter.
Digital platforms and marketplaces UK VAT
Foreign and domestic online marketplaces selling third-party digital services generally take responsibility for the VAT liability.
However, if the role in the supply is to provide for the processing of payments then this is not regarded as a digital platform and no VAT responsibility accrue.
Europe VAT on digital services
|Country (click for details)||Rate||Date||Threshold||Comments|
|EU 27 member states||17% to 27%||Jan 2015||€10k EU residents; Nil for non-EU|
|Bosnia Herzegovina||17%||Jan 2023||BAM 50.000|
|Iceland||24%||Nov 2011||ISK 2 million|
|Norway||25%||Jul 2011||NOK 50,000|
|Russia||16.67%||Jan 2017||Nil||B2C & B2B|
|Switzerland||7.7%||Jan 2010||CHF 100,000 on global income|
|Ukraine||20%||Jan 2022||UAH 1m|