2015 EU VAT Changes Webinar 10 September 2013

2015 B2C EU VAT Changes Webinar Agenda 3.00pm: Welcome, Jim Smith, IPG Chairman 3.05pm: Andrew Webb, HMRC 3.25pm: Luigi Lungarella and Ian Singer, PKF Littlejohn 3.40pm: Q&A, chaired by Jim Smith, IPG Chairman 4.00pm – webinar closes

2015 B2C EU VAT Changes Webinar Andrew Webb, HMRC

2015 EU VAT Changes and the VAT Mini-One Stop Shop (MOSS) Andrew Webb HM Revenue & Customs IPG/PA Webinar: 10 September 2013

Project Name: VAT Package | | 5 Content changes to EU VAT place of supply rules for cross border supplies of B2C services 2. Issues arising from B2C services rule changes 3. EU VAT Mini-One Stop Shop (MOSS) Special Scheme 4. Arrangements for registering and using MOSS Scheme 5. Conclusions

Project Name: VAT Package | | Changes to EU VAT rules for cross-border supplies of B2C services Principle of taxation at the place of consumption for cross- border international trade 2003 VAT on E-Services Scheme (VoES) for Non-EU to EU Supplies EU VAT Package ( ) -revenue protection and business simplification involving: Changes to EU VAT Place of Supply rules Electronic VAT refund system VAT MOSS

Project Name: VAT Package | | 7 1. EU c ross-border supplies of B2C services: Current Rules Services supplied by/to EU consumer in Member State 1 EU consumer in Member State 2 Non-EU consumer EU supplier Member State 1 Taxable in Member State 1 No EU VAT EU Supplier: Member State 2 Taxable in Member State 2 No EU VAT Non EU Supplier Taxable in Member State 1 Taxable in Member State 2 No EU VAT

Project Name: VAT Package | | 8 1. EU c ross-border supplies of B2C services: Rules from 2015 Services supplied by/to EU consumer in Member State 1 EU consumer in Member State 2 Non-EU consumer EU supplier Member State 1 Taxable in Member State 1 Taxable in Member State 2 No EU VAT EU Supplier: Member State 2 Taxable in Member State 1 Taxable in Member State 2 No EU VAT Non EU Supplier Taxable in Member State 1 Taxable in Member State 2 No EU VAT

Project Name: VAT Package | | 9 2. Issues arising from 2015 B2C Rule Changes a)Definition of telecommunications, broadcasting and e-services (scope) Examples, which are not exhaustive, provided in Articles 6a, 6b and 7(3) of Regulation 282/2011 as amended by Imp. Regulation b) Who is making the supply Where e-services supplied through a telecomms network, an interface or portal such as a marketplace for applications, presumption that intermediary is acting in their own name but on behalf of the service provider c) Determining status of the customer (non taxable person) Supplier may regard customer as a non-taxable person when no VRN provided and there is no evidence to the contrary

Project Name: VAT Package | | Issues arising from 2015 B2C Rule Changes d) Determining “place of consumption” (Reg 282/2011) The customer’s “permanent address” (in population register), or where person “usually resides” However, presumptions for supplies via: (i) Telephone box or internet café, where these are located; (ii) land line, where land line located; (iii) mobile networks; mobile country code of the SIM card, (iv) Viewing card or decoder; where card or decoder posted e) Evidence to support taxing decision For most supplies, place of consumption determined by reference to 2 pieces of non-contradictory evidence Evidence: Billing address; Internet Protocol (IP) address; bank details; SIM Card; fixed land line, other commercially relevant information With presumptions at (d), they can be disregarded if supplier holds 3 pieces of non-contradictory evidence that customer elsewhere In all cases a tax administration can rebut a presumption (where there are indications of misuse or abuse by the supplier)

Project Name: VAT Package | | EU VAT Mini-One Stop Shop (MOSS) Special Scheme Changes to VAT place of supply rules means businesses that make B2C supplies of services to other Member States might have to register for VAT in all those other Member States To reduce the burdens and costs on businesses, EU VAT MOSS will allow suppliers of telecommunications, broadcasting and e-services the option of registering for VAT in one Member State (the Member State of Identification (MSI), and to submit a single electronic MOSS VAT return and a single payment in respect of all their EU B2C supplies The MSI tax authority will disaggregate return data and payments and transmit them to the relevant Member State (s) of Consumption (MSC) tax authority

Project Name: VAT Package | | EU VAT MOSS Scheme Registration Use of the scheme is optional If business decides to register for (Union-Scheme) MOSS, they must do so in the Member State in which they are ‘established’. Can only have one EU MOSS registration Business completes MOSS VAT registration application form (see Annex to Regulation 815/2012) and sends it to the tax authority Businesses can register with tax authority (HMRC) from October 2014, so they are able to use MOSS from January Otherwise MOSS registration takes effect from beginning of calendar quarter If approved, business will be identified for MOSS with the same VAT Registration Number as for domestic VAT

Project Name: VAT Package | | EU VAT MOSS Returns For in scope supplies, MOSS registered businesses must submit, by electronic means, a MOSS VAT return, to their tax authority within 20 days of end of each calendar quarter. ‘Nil’ returns are required. MOSS return (see Annex to Regulation 815/2012 of 13 September 2012) contains details of sales made in each MSC by the taxable person Single related MOSS VAT Return payment must be made within the same time period. Non-Euro countries may require payment in their national currency. If supplies in other currencies, conversion shall be made by applying European Central Bank rate published on the last day of calendar quarter MSI tax authority will generate a unique reference number for each VAT return and will send segment to each MSC tax authority

Project Name: VAT Package | | Conclusions On 1 January 2015 important changes to EU VAT Place of Supply of Services Tax Rules Need to begin planning for changes now as they will impact on contractual terms and conditions EU VAT MOSS a potentially beneficial simplification scheme for businesses making B2C supplies to other EU Member States We would welcome a small number of businesses participating in Joint SME Business/HMRC 2015/MOSS Working Group Meetings

2015 B2C EU VAT Changes Webinar Luigi Lungarella and Ian Singer, PKF Littlejohn

IPG/PA webinar 2015 EU VAT changes 10 September 2013

Agenda Luigi Lungarella – Senior VAT manager Defining an action plan Ian Singer – IT partner IT system requirements

Defining an action plan Contractual and legal requirements Establish your responsibilities and liabilities Sales channels Jurisdictions Suitability of MOSS (Mini-One Stop Shop) Payment and reporting mechanisms Contract renegotiation

IT system requirements Identify which systems are likely to be affected Your own e-commerce platforms Third-party e-commerce platforms Invoicing systems Accounting systems Production systems Bibliographic data

IT system requirements Specify the changes required VAT calculations VAT reporting Pricing facilities Interfaces between systems Reconciliation and auditing mechanisms Parallel development issues

Summary Initial due diligence exercise Take appropriate advice Engage with key suppliers Define an action plan Allow for realistic budgets and timescales

This seminar and the accompanying handouts cover topics only in general terms and are intended to give a wide audience an outline understanding of issues relating to accounting applicable to entities in general, and therefore cannot be relied upon to cover specific situations; applications of the principles would depend on the particular circumstances involved. Furthermore, responses given in the seminar to questions are only based on an outline understanding of the facts and circumstances of the cases and therefore do not form an appropriate substitute for considered specific advice tailored to your circumstances. We recommend that you obtain professional advice before acting, or refraining from acting, on any of the contents. We would be pleased to advise you on the application of the principles demonstrated at the seminar, or on any other matters, to your specific circumstances, but in the absence of such specific advice, we cannot be responsible or held liable. PKF Littlejohn LLP is a member firm of the PKF International network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member or correspondent firm or firms. © PKF Littlejohn

2015 B2C EU VAT Changes Webinar Question time Chaired by Jim Smith, IPG