On 1 January 2015, changes will be made to the European Union VAT place of supply of services rules for certain supplies of broadcasting, telecommunications and e-services (BTE).

The changes will affect any business supplying BTE services to consumers and action is needed before the changes come into operation. The changes do not affect such supplies made to other businesses.

Broadly, the changes mean that if a customer does not provide a VAT Registration Number (VRN), and the business has no other information that suggests the customer is in business and VAT registered, this should be treated as a business to consumer (B2C) supply.

Currently, the place of taxation for BTE supplies is determined by the location of the supplier of the services. However, from 1 January 2015, the place of taxation will be determined by the location of the customer.

This is a significant change and in order to work out the country in which VAT due must be paid, businesses will be required to keep additional information that was not required before. To make this as straight forward as possible, the EU Member States discussed and agreed what a business needs to do and the records that it must keep.

To save a business having to register for VAT in every EU Member State, where it supplies BTE, the business may opt to use the VAT Mini One Stop Shop online service (VAT MOSS). This will be available on 1 January 2015, with registration available from October this year.

If the business is an EU business, it is possible to register and use the ‘Union’ VAT MOSS online service in the Member State where the business establishment (usually the principal place of business or head office) is located. Using this service means it is possible to submit a single VAT MOSS return and payment covering BTE supplies, in respect of all EU supplies of BTE services, to just one Member State.

For example, if a business registers for the VAT MOSS online service in the UK, it will be able to account for the VAT due on B2C BTE sales in any other Member States by submitting a single VAT MOSS return and any related payment to HMRC. HMRC will then send an electronic copy of the appropriate part of the relevant VAT MOSS return, and the related VAT payment, to each relevant Member State’s tax authority on behalf of the business. The VAT rate used will be that of each Member State of consumption at the time the service was supplied.

If a non-EU business makes B2C BTE supplies to EU customers and has a fixed establishment in the EU, that business will also be able to register and use the ‘Union’ VAT MOSS online service.

See here and here for details of the Irish MOSS and guidance from the Irish Revenue.