Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Are you an operational US organisation or an UK ditto? Furthermore is the organisation supplying digital services? This is the key to this anti-avoidance EU measure. Taxamo gives the following pithy summary:
'So, what changes in 2015? From January 1, 2015, the location of the end customer (non-taxable person) is all that matters, but this was also implied in the 2003 legislation. From 2015 onwards companies with B2C sales in the EU will have to prove where their end customer is. Only B2C supplies of digital services are affected, B2B transactions operate as normal.'
I do hope that I am being of some assistance. I would urge you to read the Taxamo essay, I think you will find it very informative as it summarises the position so neatly. It is available here:
B2B i am in the UK, a VAT registered business, basically its the rules regarding B2B and reverse charge
If i buy say a service (web hosting from a USA company) but use it from the UK, this company doesnt charge me tax, some show me a EU XXXX number, in my records am i supposed to account for reverse charge on these transactions, also the same for digital products bout from outside eu, i.e. downloadable software which is used (by us) in the UK
I have tried to read the various documents from HMRC and other sources, but the information is overwhelming and confusing at the same time.
Also i sell products to customers and ship them outside the EU, how do these fall under the VAT rules.
From what i can make out VAT MOSS, relates to me selling to EU member states, and having to charge vat to that customer based on their tax rate and keep several pieces of info to proof where that customer is and the rate of VAT charged to this customer, and report it via MOSS to HMRC
So Basically i should record like this
Sales to EU (B2C) Charge VAT unless VAT Number Supplied
Sales to EU (B2B) Reverse Charge Applies
Purchases Outside EU (USA etc) Mark as "Out of Scope" for VAT
Sales Outside EU (USA etc) Mark as "Out of Scope" for VAT
Could you be a bit more clearer on your term "Imports"
RC = Reverse Charge
Physical Products [RC or 0%] ?
Digital services such as dropbox.com (USA based consumed in UK) [RC or 0%] ?
digital products, such as software purchases downloaded and used in UK [RC or 0%] ?
I use the term "out of scope" from this explaination in the help pages of my accounting software, recently updated after january 2015
Outside the Scope of VATSome items are completely outside the scope of UK VAT. These often include sales or purchases made outside of the European Union. There are also some anomolies in there such as Congestion Zone charging, toll brides, tunnels and MOT testing services.With the addition of the VAT MOSS rules (1st January 2015), it will also be necessary to levy VAT at the consumer's local VAT rate within their EU member state for certain digital services. This in effect would mean that the invoice is outside the scope of UK VAT.
Just to be clear on this point
If you buy in a service subject to MOSS it may be assumed to have suffered VAT input tax at UK rates and this can be reclaimed.
1) service subject to MOSS [ How to determine this then ]
2) If you buy in [ am i correct in this statement you mean from outside the EU ? ]
So going off our conversation that the following
Invoice from Dropbox.com (USA Supplier)
States £x.xx Total (Includes 20% Tax) and is reclaimable via reverse charge ?
What if the supplier doesnt state like above and the invoice state 0% tax ?
It is reclaimable just like any other purchase if the tax is quoted. It is not a reverse charge item.
If the invoice states 0% then there is no input tax to reclaim. If the seller is silent on the subject that a VAT charge at 20% may be assumed and reclaimed. Remember than many organisations have been ignoring the effect of MOSS for over a decade.
Here is the summary from Happy Bootstrapper:
'Until now European businesses selling to digital goods and services to European consumers have charged VAT based on where their business is located. Now the VAT must be charged based on where the consumer of the service/goods is located.
The change was made because EU wants to get more money from transactions for American companies – or to force them to move more operations to EU to get VAT reductions.'
Confused no, what do you mean by "silent"
Also "It is reclaimable just like any other purchase if the tax is quoted. It is not a reverse charge item." i was of the understanding that this was only possible with another vaild VAT number or similar GTIN etc
Ok that clears up the USA end for me.
So i can presume VAT on a Invoice from USA Company, if there is no mention of TAX or VAT
And if i provide my VAT number and dont get charged VAT this is classed as Reverse Charge @ 20%
Also For EU VAT Member States Purchase the Reverse Charge is @ 20% (UK) and not the EU Countries Rate.
i.e. eBay has 15% LUX Tax/VAT
But i would record the VAT on the reverse charge @ 20% and not 15%
From reading on the web you answer doesnt see to tally with other answers
In the example of a UK business spending £1000 via Google AdWords, it means:
can i ask which country your expertise/qualification was gained ?
Reverse Charge Applies to B2B, from what i read the changes VAT MOSS brought in are relevant to B2C transactions of digital services and not B2B
even the image you provided with the table states this, please see image above