Legal, Tax, and Accounting December 8, 2020

Pay tax on digital products for customers living in UK?

SodaSoda @sodasoda

Hi,
The Brexit thing seems to be crazy: I probably misread but there seems to be no threshold - if you sell $1 or $10 or $10000 of digital products (software download or ebooks) to UK consumers, you have to register at their local tax administration.

I think many of us on IH sell digital products or digital service worldwide, including customers in UK.

How do you handle this?

  1. 2

    Certainly agree Brexit is crazy! 🤪 Been checking but it's unclear. Do you have a link to the info you've been reading?

    1. 1

      https://www.avalara.com/vatlive/en/vat-news/brexit---selling-digital-goods--re-applied-for-a-moss-return-.html i see 'Remember – there is no threshold for this.All UK sales must be immediately reported to the UK’s HMRC'

      1. 1

        Yep. From UK gov site:

        The current 10,000 euros threshold for cross-border sales of digital services inside the EU will no longer apply.
        [https://www.gov.uk/guidance/pay-vat-when-you-sell-digital-services-to-uk-consumers-from-1-january-2021]

        Also:

        If you’re an NETP (Non-established-taxable-persons) you may appoint a tax representative.
        [https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat#non-established-taxable-persons-netps-basic-information]

        So could appoint a tax representative instead of registering. Or maybe look to use a reseller who sells into the UK.

  2. 1

    We are based in EU and we do sell digital services to the UK.

    It seems one needs to register for a VAT ID with Her Majesty Revenue & Customs and then declare VAT online quarterly. No more reverse charge, no more MOSS.

    I feel overwhelmed. Our German tax accountant and the book keeper also don't know how to continue.

    Tips welcome.

    1. 1

      My questions to whom it may concern:

      VAT registration:
      I have created an Account with HMCR, but I don't see where to go next with registering our German company for VAT TAXes in UK. Can you point me to the form I need to register with or tell me the exact steps I need to take with the self service dashboard? I clicked on "add a tax, duty or scheme" but I am not even sure what to answer with the next question.

      Only VAT?
      Do I only need to register for VAT (like with MOSS) or will I even need to create a Limited and declare taxes? The mail and the website only mention one need to register.

      VAT transmission:
      Where can I find information on how to transfer the VAT returns? I guess there is some API documentation or they might be some CSV format one need to create an upload. Please provide information on technical implementation and automation. Also, how often will I need to file TAX reports?

      No more B2B?
      If I understand correctly, previous "Reverse Charge" will no longer apply? So I guess all invoices will need to include VAT? Please confirm.

      No more VATIN?
      We used to store VATIN with our clients. I guess those will become obsolete. Please confirm.

      What about SEPA?
      Some of our client are paying with SEPA direct debit. What will happen to that?

      Is € on invoices to the UK OK?
      We currently charge our clients in Euro. Our system is not capable of charging in Pound. Can we proceed doing so?

      Bonus Question: Do you know why?
      I would like to know why the United Kingdom is the only country we need to do this kind of VAT filing for? I do understand BREXIT, but this is not required for any non-EU country, like Switzerland or Norway.

      1. 1

        Have you found new answers about this @frank_laemmer?

        If you can do screenshots of the HRMC portal, and explain where we have to fill the tax declarations, it would be great!

      2. 1

        Oh this is complicated indeed!

        Your bonus question is very true: imagine if we have to do this for every non-EU country in the world, it would be a total nightmare!

        Please please please post some news/answers to these questions when you find them, it will be helpful for many indiehackers!

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      This comment was deleted 2 months ago.

  3. 1

    Joy to Brexit. 😭

    I haven't started looking into this yet, as UK resident I should. Where have you read this?

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