United Kingdom


  • Service: Tax, Indirect Tax
  • Industry: Communications, Media, Technology
  • Type: Video
  • Date: 12/09/2013
  • Length: 4:21 Minutes

Are you ready for the 2015 VAT changes? 

Text version:


On 1st January 2015, there will be a major change to VAT law, applying to businesses trading in any of the 28 EU member states.


The services affected are: telecoms, broadcasting, and electronically supplied services.  These services supplied to any non-VAT registered customer will now be taxable, according to where the consumer is resident.


Electronically supplied services is a very broad range of services.


It includes: web hosting, distance learning, downloading an app, an ebook, software, subscription services; the list goes on, so there are more businesses caught by the new change of law than one might first think.


The changes have been on the agenda for quite a while now, and actually 2015 sees the culmination of a number of changes to the manner in which VAT gets charged on services.


But it's only now that we've had the final implementing regulation released, by ECOFIN, that we can actually see how this legislation is going to work.


Well at the moment, the law says that VAT rate and rules apply according to where your business is established, so you could be based in the UK, let's say, and you could supply non-VAT registered people all across the European Union.


And you'd only have to apply the UK rate of VAT and the UK rules, which is very simple for business, but it hasn't created a level playing field.


The reason for this is because the rates in the 28 countries vary from 15% to 27%, so one could get an advantage by establishing in a lower VAT rate jurisdiction.


And that is really what the member states are trying to overcome.


All organisations that basically supply electronic services within the European Union, or from outside of the European Union into the European Union to consumers will be affected by these particular changes.


The impact is going to be primarily felt in a B-to-C environment.


But it's also going to have a fundamental impact from a B-to-B perspective.


Well any business, no matter where you're located, if you are supplying services that are electronically supplied, telecoms, or broadcasting, you will be affected, whether or not you have any sort of establishment in the European Union.


A business is going to have to collect a whole load of information about their customer, to determine where they're resident.


They're going to have to get to grips with what the legislation says in 28 different countries, and they're going to have to build the systems and capability to be able to account for VAT across all of those countries.


Suppliers have a choice; you can VAT register in every member state, where you have a consumer or non-VAT registered business resident there, or you can choose to use the simplification procedure, which is the Mini One Stop Shop.


These changes are going to have an impact on revenues and profit margin.


If you're currently trading from a lower VAT rate jurisdiction, your revenues and profit margin could fall, because of the rising VAT cost.


If you're currently in a high VAT rate jurisdiction, you could benefit, because the average VAT rate would be lower, so you'd have an increasing revenue and increased margin.


Go to kpmg.co.uk, we've got lots of information there, links to the relevant legislation, also some more practical examples of how you actually deal with the legislation going forward, or alternatively call your local KPMG advisor and we'll be delighted to help.

 This short video introduces the VAT place of supply changes due to come into force from 1 January 2015. We understand that time is precious, which is why we have summarised the key points in just four minutes. The questions explored in this video include:


  • What is actually changing in 2015?
  • Why are these changes happening?
  • Who will be affected?
  • What will this mean at a practical level?
  • What are the options available?


To find out more, visit our 2015 webpage or speak to your local KPMG advisor. Watch the next video in our series, "Business impacts of the 2015 VAT 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