To ask Mr Chancellor of the Exchequer, what assessment he has made of the potential effect on small businesses of proposed changes to EU VAT rules for digital sales.
Answered on
10 December 2014
Businesses that supply digital services to consumers in other Member States are covered by the new VAT rules. However, there are a number of supporting measures to mitigate the impact on small businesses.
HMRC will allow businesses below the VAT registration threshold to register for VAT in respect of their cross border sales only. This means these businesses can use the on-line Mini One Stop Shop, which removes the burden of registering for VAT in other Member States, whilst also retaining the benefit of the national VAT threshold for their domestic sales. Small businesses that sell through a digital platform will not have to register for VAT because the operator of the marketplace has the responsibility to account for the VAT.
HMRC has also provided extensive guidance to support businesses, including organising a Twitter Clinic and publishing answers to the main questions and is engaging with Enterprise Nation about the concerns of micro businesses.
A Tax Information and Impact Note was published on 10 December 2013 which included an assessment of the impact on small and micro businesses. It is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264647/Overview_of_legislation_in_draft.pdf
Introducing a cross-border threshold for digital sales is not permitted under European Law. This would require a change in EU law agreed by all Member States.