Supply of E-Publications
VAT Question
My client has their own website on which they make sales of e-books, which are downloaded by customers worldwide. My client’s customers are consumers rather than businesses, and these e-books meet the conditions in HMRC guidance to be zero-rated, but my client has been advised that they will have to pay VAT on such sales when made to consumers in the EU. Is this correct?
VAT Answer
Back in 2018, prior to Brexit, the EU amended it EU Directive to allow EU countries to apply a rate other than their standard rate to E-publications, where before the legislation only allowed this to printed versions of certain publications.
Following this change in EU Law, in 2020 the UK extended it’s zero-rating of printed matter to include, subject to certain conditions, similar publications issued in electronic format.
HMRC’s guidance in section 9 of VAT Notice 701/10 and their online manuals beginning VBOOKS8490, was updated to reflect these changes.
However, whilst the UK chose to apply their zero-rate of VAT to qualifying E-publications, most if not all other EU countries chose not to apply their zero-rating but to instead apply a VAT rate lower than their standard rate to these publications.
The supply of E-publications is a supply of a digital service and when provided to consumers, the supply of the E-publication is deemed to be made in the country in which the consumer belongs and, when the consumer is in the EU, at the appropriate VAT rate in that particular EU country.
Under EU rules, your client, as supplier, is liable to charge and/or account for that VAT to that EU countries VAT authorities and this would usually mean that as soon as your client makes a supply, they must immediately register for VAT in that EU country.
However, to save having to register for VAT in multiple EU countries, the client can chose to register in one EU country of their choice and once registered can then sign up for the online ‘Non-Union One Stop Shop’ (OSS); which was formerly titled VATMOSS and which is an EU simplification to allow the VAT due in multiple EU countries to be declared and paid using one EU wide VAT return.
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