Under the new rules taking effect on January 1st 2015 which apply to online sales of music, ebooks, training DVDs, self-help videos and related products, even the smallest of businesses in Europe will be expected to register for VAT in the countries in which their customers are based rather than the country which their business trades from.
The rules were devised to call a halt to VAT avoidance by larger, primarily US, corporations which have traditionally sought to base their trade and accountability in the countries with the lowest VAT rates. This not only reduced their corporate taxation, increasing their profits, but presented unfair competition to other retailers which they could undercut as a result of paying less VAT on their sales.
Whilst many applaud the new regime in respect of these larger corporations, the impact on smaller businesses is far greater red tape to deal with despite the VAT Mini One Stop Shop (VAT MOSS) service established by Revenues & Customs to help and for the really small businesses which are under the VAT threshold in the UK, registering in other countries will cost them their VAT registration exemption status here. It has been estimated that some 450,000 small traders could be adversely impacted.
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