What will happen to VAT?
It is unlikely that VAT arrangements for books and ebooks will change after Brexit, but if you sell any other items beyond these it would be worth checking their status.
What will happen to Reverse Charge on digital products like ebooks?
Ebooks count as digitised products for VAT purposes, and are treated as services. B2B rules for services are not changing, but the rules for B2C supplies may create a change because in a no-deal scenario the UK will move from being an EU country to a non-EU country.
This will mean the UK no longer operates a single VAT registration for clearing local VAT charges on ebooks to other EU countries. This is known as the Mini One Stop Shop or MOSS. Therefore, if traders wish to continue to operate this scheme for EU sales they will be required to register for VAT in another EU country under the non-EU MOSS scheme.
As the UK will be outside the EU, there will also be a change to the application of the use and enjoyment rules for digital services. Right now, some countries (including the UK) have implemented use and enjoyment rules to change the place of supply to their own country, where otherwise the supply would be regarded as in the EU or outside the EU. As the UK will be outside of the EU, it is possible that the use and enjoyment rules for services may need to be reviewed again by businesses.
What are the VAT and duty implications for selling ebooks directly to consumers in Europe?
Ask your ebook distributor / provider what continuity plans they have made. They should also be able to keep you updated on how your revenue per title is likely to be affected. You may wish to consult with VAT specialists to review what else needs to be done, as each contractual supply chain is different.
On duty, ebooks will not be subject to customs process as they are transmitted electronically.
Will there be any changes to Distance Selling Threshold limits?
In a no-deal environment, distance selling rules applicable for VAT for B2C sales will no longer be applicable for UK sellers. If they are non-established sellers then they may need to register for VAT where sales are made. Depending on values, it may be worth maintaining an EU stock which can be topped up.
There is currently no customs duty on printed matter, and this will remain the case post-Brexit.
It’s recommended to check the duty rates for books to see whether duty will be chargeable on imports to the EU. Potential solutions will be dependent on the nature of sales, location of customers and values involved.
How will project-based consultancy services to the EU be affected?
It does rather depend on specific circumstances, but in general B2B consulting services, unless covered by one of a small number of exceptions, are subject to the reverse charge in the country of the customer. This is not anticipated to change.
What will happen to place of supply rules for UK businesses supplying services into the EU?
If the UK leaves the EU without an agreement, the main VAT place of supply rules will remain the same for UK businesses. The current ‘place of supply’ rules determine the country in which you need to charge and account for VAT. These rules are in line with international standards set out by the Organisation for Economic Co-operation and Development (OECD).
For UK businesses supplying digital services to non-business customers in the EU, the place of supply will continue to be where the customer resides. VAT on services will be due in the EU member state within which customers are resident.