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Sale of Services to EU consumers (non business)

Sale of Services to EU consumers (non business)

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I have a client who operates a company that provides property owners with booking software whereby there is no software installation involved or technical skill required apart where the property owners need to ask their web designers to add a link to the booking pages of our client's website.

The consumer is basically paying for the use of a license to operate software.  I have recently attended a course on the latest changes relating to VAT from 1 January 2015 and the alarm bells have started ringing!

A previous colleague I believe incorrectly advised the client at the time of the last change of supply of services rules relating to the period from 1 January 2010 that supply of services to consumers in the EU by referring to VAT 741 A section 14 and 15 and intern stating to the client that because it was a software licence per section 15 that the supply should be zero rated.  I have referred back to the notice and contacted the VAT helpline who are of little help stating that I again need to refer back to these sections.  I feel the client has not advised correctly as section 14 does not apply if the consumer is in another EU state and I feel that section 15 refers to non EU transactions even though there is mention of grant of software licenses.  HMRC also mentioned that there was no need for the client to register for MOSS from 1 January 2015 as the client's activities are not telecommunications, broadcasting or e-services.

I got confirmation from the technical support of my professional body and they have stated that the transactions to  EU consumers (non business) should have standard rated which I feel the client will contest this.

I have gone back to review the transactions since 01/01/2010 that the client has treated as zero and there are obviously some sales to EU consumers which should have been standard rated.  The client also had the tendency to charge non business consumers who were out of scope of VAT with output VAT!  So the impact of final calculations could be small in comparison to his turnover over the last say 4 to 5 years.

I am again unsure whether the client should prepare a MOSS return from 1 January 2015 due to new rule changes even the VAT helpline state there is no need but my professional body states that they could be.  I have reviewed the definition of digital services based on the MOSS guidelines and I am inclined to agree with HMRC!

I just need some guidance on whether the client should register under MOSS.  The client's main income is from the UK which he standard rates but there are say a dozen or so transactions a quarter to the EU (business and consumer) and non EU.  He already does EC sales lists for business to business transactions.

Sorry to ramble on and its Friday!


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By Les Howard
11th Oct 2014 14:51


From your description I would suggest that the services do fall within thus definition. The key test is that supply involves no or minimal human intervention to make the purchase.

If the services are B2C, then the client should register under MOSS, which is far better than registering in each Member State where he makes sales!

But, if the customers use the software to generate or manage property bookings, then they are surely in business. If so, then the supplies are B2B, and MOSS does not apply.

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