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UK VAT on foreign digital services

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
  • Gambling
  • E-books
  • 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
Albania 20% Jan 2015 Nil
Andorra 4.5% Jan 2015 Nil
Belarus 20% Jan 2018 Nil
Georgia 18% Oct 2021 Nil
Iceland 24% Nov 2011 ISK 2 million
Kosovo 18 Sep 2015 Nil
Moldova 20% Apr 2020 Nil
Norway 25% Jul 2011 NOK 50,000
Russia 16.67% Jan 2017 Nil B2C & B2B
Serbia 20% Apr 2017
Switzerland 7.7% Jan 2010 CHF 100,000 on global income
Turkey 18% Jan 2018 Nil
Ukraine 20% Jan 2022 UAH 1m
UK 20% Jan 2015 Nil

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