Unless you’ve been living in another galaxy for the past 4 years you’ll know the United Kingdom is leaving the European Union. As we’re a UK company, providing digital telecommunications services to the EU, this will result in a few changes for us, and for you when we leave the transition period at midnight at the end of December, and start under new rules from January the 1st 2021.
Despite this being a mere six weeks away, we’re still unsure about the details (or any much substance for that matter) of the UK’s future relationship with the EU. Despite this. some elements are clear and so we’d like to present what those are. I’ll try and refrain from ranting about Brexit here and we’ll be sure to keep you updated of any future changes as and when we become aware of these.
The largest, and most annoying change will be the removal of the digital services VAT threshold (yawn, I know). Currently as a pseudo-EU member state we, as a micro entity, do not have to pay VAT in other EU countries as our inter-state transaction volume is below €10,000. This threshold will be zero from January.
This means we will have to register and account for EU VAT on services sold to customers in the EU. Thankfully the EU does allow us to register with one member state and pay all VAT to them via the Mini One Stop Shop (MOSS), but this doesn’t make the entire process that much simpler, although help is appreciated.
Enough about what we have to do, what does this actually mean for you, our customer?
In short things are about to get a lot more complicated. We will need to collect at least two pieces of non contradictory evidence about which country you’re resident in, so we can pay the correct tax authority. This can be such things as (according to the EU);
In practise this means unless we already have this information we’ll be emailing you before January to collect what information we need, and we won’t be able to accept any orders from you post January 1st until we have this information.
If you pay us via direct debit or credit bank transfer we can usually retrieve your bank account’s country code, but this is not guaranteed, and we’ll still need another piece of evidence. If you’ve paid us via card in the past we’ve probably collected a partial billing address (enough to identify your country) and your card will also have a country attached to it, if these match up we don’t need any more information. For payment methods such as giropay that are only available in one country, we also already have enough information. If your case isn’t covered here expect an email with more precise details.
We may use GeoIP to have a guess at your country, but we don’t plan on using it as evidence due to its unreliability, and can quite easily be challenged by tax authorities.
We need to know your country so we can charge the correct VAT amount, which will result in slight price differences across the EU. An additional complication is that we’re not VAT registered in the UK, which means we have two options, neither of which is desirable.
We’ll probably take the second option, but this is a bit of a punishment to our not insignificant EU customer base. However being VAT registered in the EU will mean we don’t pay VAT to some EU based suppliers, which will offset this cost increase in some cases.
Lastly if you are EU VAT registered, please do get in touch so we don’t charge you VAT where we should have not from January.