Skip to main content

VAT on Selling Digital Services Post-Brexit

By 16/12/2021June 20th, 2023No Comments

If your business sells digital services to the EU from the UK there are significant changes to VAT on selling digital services reporting post-Brexit.

Digital services include things like website hosting, broadcasting, telecommunications services, video on demand, downloadable music, games, apps, software and ebooks. If you supply any of these to EU member states and you forecast to make more than £8,818 of sales (including VAT) in a calendar year, then you must do one of the following:

  • register for VAT in each of the countries you trade with, or,
  • Register for the MOSS (Mini One Stop Shop) Scheme

My company is already a member of UK MOSS, do I need to register?

You can use your existing MOSS account to declare all sales VAT up to 31 December 2020. But, you will not be able to use the UK’s VAT Mini One Stop Shop (VAT MOSS) service to declare sales and pay VAT due in EU member states after 1st January 2021. After this date you need to re-register.

There are two schemes running under MOSS:

  • the union scheme, for businesses established in the EU or with at least one branch based in an EU country
  • the non-union scheme, for businesses not established in the EU and without any branches based in the EU

If your business does not have a head office or branch in an EU member state you will need to set up a non-union scheme. Firstly, You have to designate a member state of identification. This can be any EU country you choose and can be done online through your designated member-states identification portal. Once your registration details have been received and validated, they will be stored in a database and forwarded by your member state of identification to all other EU countries. For a list of EU member states and quick links go to:

VAT rules

You will be allocated a VAT number by the EU country you have chosen to be your member state of identification and charge VAT at the rate of the EU countries where your customers reside. You should apply the same invoicing rules as your member state of identification (an invoice is not required in most countries when supplying services under the MOSS scheme). Please remember, these VAT returns are made in addition to your normal UK domestic VAT returns.

For more information about MOSS, please go to:

Looking for business accountancy services

Steve Marshall
Steve Marshall
The whole team at Direct Peak have been amazing to work with. Everything we have been looking for from an accountant. Thank you from Acoustic Associates
Luke Tyler
Luke Tyler
The Direct Peak team are exceptional in all they do. They demystify my questions on accounting, offer clear, sound advice, and help me to make informed decisions about my business.
Don Wiid
Don Wiid
Karl Newman and his team help us with our Xero accounts system, making sure it is accurate and up to date. The real value though, is Karl's experience as a management accountant, providing indispensable advice on a monthly basis to ensure we keep growing.
Craig Sawyer
Craig Sawyer
Direct Peak are the perfect accountants for me. Always helpful and friendly. They take away any of my accountancy headaches which allows me the time to focus on my business. Would highly recommend them and do to any business owners I can. Thank you all !
Kelsey Brace
Kelsey Brace
I've worked with Karl & Direct Peak for years. They have always provided great service and advice. Highly recommeded!
Sana Hanassi-Savari
Sana Hanassi-Savari
Great service, I would highly recommend them. The team are friendly, always around to help and very knowledgable.
Simply Antivirus
Simply Antivirus
Direct Peak was the right choice for us. Outstanding friendly service. The team are highly knowledgeable regarding tax and financial matters, and they have been an asset to the running of our business. Very approachable and have an answer to all my questions. Highly recommend them! Very well done guys!
catherine Johnson
catherine Johnson
I recently changed my Accounting to Direct Peak, mainly due to Karls brilliant support with advice regarding making Tax Digital and around my business growth intentions. Having run my own small business and being with my previous accountant for 13 years, I have been SUPER impressed with every aspect of the move - the advice, the support, and mostly the friendliness of the team and their willingness to want to help. Eve has been so amazing at supporting me to make the transition to Digital VAT returns - I cannot recommend Karl and his team at Direct Peak highly enough - Thanks Guys!
Peter Baker
Peter Baker
Karl has been outstandingly patient and generous with his time. I cannot recommended Karl enough. He has helped massively in starting up my own company.
Click Here

Dedicated Contact

Direct Peak provides a dedicated business tax accountant, who will prepare your annual accounts and tax returns. They will be on hand to answer any tax queries you have.

Click Here

Tax Efficient

Your business tax accountant will ensure that the company is set up in the most tax-efficient way and that you are claiming for all the correct expenses to maximise your earnings.

Click Here

Quick Turnaround

We aim to turn around the annual accounts and tax returns quickly to give you visibility of your tax bill well in advance of it being due.

VAT on Selling Digital Services Post-Brexit: Understanding the New Regulations

Since the United Kingdom’s departure from the European Union, there have been several changes in the taxation of digital services, particularly regarding Value Added Tax (VAT). The implementation of new regulations has had a significant impact on businesses selling digital services to customers in the UK and the EU. The details of VAT on selling digital services post-Brexit, highlighting the key changes and their implications for businesses.

Previous arrangements

Prior to Brexit, businesses selling digital services in the EU were subject to the VAT rules of their country of establishment. However, with the UK’s exit from the EU, new regulations were introduced to ensure a fair and consistent VAT treatment for all member states and the UK.

Changes in VAT Rules

The most significant change in VAT rules post-Brexit is the introduction of the “One-Stop-Shop” (OSS) scheme. The OSS scheme simplifies VAT compliance for businesses by allowing them to register for VAT in one member state or the UK and declare their VAT obligations for all EU member states. This means that businesses can avoid the need to register for VAT in each individual EU member state where they have customers.

For UK-based businesses selling digital services to EU customers, they can opt to register for the Non-Union VAT MOSS (Mini One-Stop-Shop) scheme. This enables them to report and pay VAT due on their EU sales through a single return filed in the UK. The Non-Union VAT MOSS scheme ensures that UK businesses can continue to benefit from simplified VAT procedures when dealing with customers in the EU.

Impact on UK Businesses

The changes in VAT rules have both positive and negative implications for UK businesses selling digital services. On the positive side, the OSS scheme simplifies the VAT compliance process and reduces administrative burdens. Businesses can now handle their VAT obligations centrally, leading to cost savings and improved efficiency.

However, one notable challenge for UK businesses is that they are no longer able to benefit from the VAT threshold when selling digital services to EU customers. Previously, businesses with an annual turnover below the VAT registration threshold in their own country were exempt from charging VAT. With the new regulations, this exemption no longer applies, and businesses must charge VAT on all digital services provided to EU customers, regardless of their turnover.

Impact on EU Businesses

For businesses based in EU member states selling digital services to UK customers, the VAT rules have also undergone changes. These businesses are now required to register for VAT in the UK if their sales to UK customers exceed the UK VAT registration threshold. This introduces additional administrative tasks and potential complexities for EU businesses, as they need to familiarise themselves with the UK VAT system.

VAT on selling Digital

The VAT rules on selling digital services post-Brexit have brought significant changes for businesses operating in the UK and the EU. The introduction of the One-Stop-Shop scheme has streamlined VAT compliance, allowing businesses to handle their VAT obligations more efficiently. However, the loss of the VAT threshold exemption for UK businesses and the need for EU businesses to register for UK VAT present challenges.

To navigate the new regulations successfully, businesses are advised to seek professional advice and ensure compliance with the VAT rules of the respective jurisdictions. Staying informed about updates and changes in VAT regulations is crucial for businesses selling digital services to maintain compliance and avoid any potential penalties or disruptions to their operations.