Monday, 8 December 2014

#VATMESS - the new EU VAT regs on digital downloads - official response

Vince Cable MP has sent his reply to the petition re the new EU VAT regulations on digital downloads -

The changes to VAT on digital products is not new or sudden - the change was agreed in 2008 and we've done a lot to communicate it to businesses. Regardless, the majority of UK micro-businesses will not be affected.

Here's a breakdown of how the changes affect micro-businesses:

Micro-businesses that trade only in the UK - and never sell to the EU - won't have to do anything. They won't have to register for VAT in 2015.

Micro-businesses that do sell to other countries in the EU but only do so through marketplaces like an app store also won’t have to register for VAT. It's up to the operator of the marketplace to account for VAT charges.

Micro-businesses that trade to the UK and to the EU will have to register for VAT. But if they can separate out their cross-border business from their domestic they will only have to register for VAT on their cross-border sales. UK sales will be unaffected.

Hope that helps clear up the change.


P.S. Lib Dems want to introduce a digital bill of rights - can you let us know what should be a part of it?

Read the comments to this and the actual petition to see how people will be affected by the new regulations.

Re the format of his reply, clearly Nunthorpe Grammar School (his old school) didn't teach their pupils how to draft a business letter very well - a P.S. on an official reply!  My English teacher would have given him a right ticking off for that, as evidence that Mr Cable hadn't thought his reply through properly before writing.  And as anyone can go back and edit on screen these days, it is doubly irritating and patronising.  It is the kind of letter writing affectation that might have been excusable for Victorian young ladies, but not for a modern politician!

UPDATE - you might also be interested to read this - Updates From Our Meeting With HMRC, HM Treasury and A Minster On 4th December 2014

This all seems to be a huge amount of legislation and paperwork for very little returns from small businesses.  Unless I am missing something and ONE EU country really is the centre of ALL EU produced digital downloads, then surely the VAT lost to the seller's country and paid in the purchaser's country is simply going to balance out?

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