United Kingdom


  • Service: Tax, Indirect Tax
  • Type: Video
  • Date: 09/10/2013
  • Length: 04:22 Minutes

Business impacts of the 2015 VAT changes 


Why should we start thinking about the 2015 VAT changes now?

Although it's a long way away, there are a lot of commercial, legal, and practical accounting issues that need to be addressed. It's also a case about thinking who your stakeholders are, who is going be impacted, and around that building a plan, because 2015 is not far away and time will go very quickly.


What are the compliance issues?

The main compliance question a business will have to ask is whether or not they are going to VAT register separately, in each member state where they have a consumer or non-VAT registered customer that's resident, or whether they actually apply for what's called the 'Mini One Stop Shop' simplification scheme.
Under either method the business will still have to understand the VAT rates and particular rules of every member state that they're trading in, and be subject to the audit of that member state.


How will 2015 affect systems and processes?

There's going to be quite an effect on systems and processes. This is fundamentally because businesses will now need to be able to identify where their customers are actually located. You really need to start planning how your system is going to cope with the changes. That could mean changes like introducing new VAT invoicing procedures or requirements. It could mean capturing and holding particular data, which helps you determine where your customer is located.

What are the commercial issues?

From a commercial perspective, the key issues are going to revolve around pricing.
Because different rates of VAT are now going to need to be charged across all of the EU, this is going to fundamentally affect the margin which you as a business may be able to make in respect of the sales which you generate.
You're going to need to think about whether or not you go for pricing at a very individual member state level.
Alternatively you might choose to go for a blended rate, because everybody likes universal pricing, which in many respects makes sense commercially, but again may have an impact on your margins.
It's not just about VAT, so thinking about a complimentary direct tax, transfer pricing approach is also going to be necessary in this particular regard.
Here's a handy reminder of the key areas which you need to think about when you start to move into your 2015 transition.
Compliance, this is key to how you deal with 2015.
Some businesses will find it very easy to use the Mini One Stop Shop system.
Others who are already established in other member states will choose to go down the local VAT registration route.
From a commercial perspective, you need to think about pricing in particular.
Are you going to have dynamic pricing, or are you going to go for fixed pricing?
Think about your customers, of course.
What is the impact going to be on them?
What are they going to see in terms of these particular changes?
Legally, in terms of how you interact with your customers, that's also going to change, particularly if you're an intermediary, or you actually provide content on behalf of somebody else.
You’re going to need to think about whether you're acting as an agent or as a principal; there is a fundamental difference between the two.
Invoicing, that will need to be in the local language, ensuring that all the other invoice details which would normally be found on local invoicing also appear post-2015.
From a systems and IT perspective, this is critical: you need to know where your customer is established.


What should be put into action now?

A number of our clients are already beginning to look at these particular challenges, with a view that they're getting workshops together, working with stakeholders within the business, and communicating across their communities, in order to understand what the full impact of 2015 will be for them.


To find out more.

To find out more, go to the KPMG.co.uk website, look for our 2015 webpage.
You can find lots of really useful information on that site.


This short video is the second in our series exploring the business implications of the upcoming VAT place of supply changes. The changes start on 1 January 2015, so we understand time is precious, and that’s why we’ve summarised the key points in just four minutes.


The questions we explore in this video include:


  • Why should we start thinking about the 2015 VAT changes now?
  • What are the compliance issues?
  • How will 2015 affect systems and processes?
  • What are the commercial issues?
  • What should I put into action now?


Visit our 2015 webpage for further information or speak to your local KPMG advisor.


Watch the next video in our series, “Outstanding issues for the VAT 2015 changes”.


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 Amanda Tickel KPMG in the UK  

Amanda Tickel

Indirect Tax
020 7694 3780
email Amanda

 Mike Camburn KPMG in the UK  

Mike Camburn

Indirect Tax

020 7694 8686
email Mike