Digital VAT

Digital VAT, also known as "VAT on digital services," is a specific type of VAT that applies to businesses that sell certain digital services to customers in the UK. This includes things like online streaming of movies or music, e-books, software, and online courses.

The rules around digital VAT were introduced in 2015 as part of changes to EU VAT regulations. The main aim was to ensure that VAT was charged in the country where the customer was located, rather than the country where the business was based.

Under these rules, businesses that sell digital services to customers in the UK must register for VAT in the UK if they exceed the UK VAT registration threshold (currently £85,000). This means that they must charge VAT on their sales to UK customers, and submit VAT returns to HM Revenue & Customs (HMRC).

One of the key features of digital VAT is the Mini One Stop Shop (MOSS) scheme. This allows businesses that sell digital services across the EU to register for VAT in just one member state (usually their own), and then submit a single VAT return for all their sales across the EU. This simplifies the process of complying with VAT rules for businesses that sell digital services across multiple EU countries.

Overall, digital VAT is an important aspect of the VAT system in the UK and the EU, and it is important for businesses that sell digital services to understand the rules and ensure that they are compliant.