You may be aware of the upcoming changes to the European Union VAT regulations applying to business to consumer suppliers of digital services. These changes will come into effect on 1 January 2015.
To summarise the changes: if you sell digital services to a consumer in the EU, you will need to charge that consumer the VAT for their country, not UK VAT.
Whilst this applies to sellers of stock images and other digital services, the HMRC’s guidance issued on 10th December 2014 advises that “Individually commissioned content sent in digital form e.g. photographs, reports, medical results” are not covered by this new ruling.
Therefore this advises that if you offer downloadable files for sale via your online proofing account for stock images you will need to review your arrangements for VAT, but if you are selling images relating to commissioned work, the existing rules regarding VAT will apply.
You can read more about these changes on the HMRC Guidance Website.
We also recommend that you take independent advice from your accountant or another tax professional to ensure that your existing VAT arrangements do not need to be altered to account for this new EU ruling.
If appropriate, you have the option to either register for VAT in each of the countries you sell, then file VAT returns for each country, or you can register for the UK’s MOSS (Mini One Stop Shop), which allows you to submit one return for all the EU countries you sell to, and then MOSS distributes the funds accordingly. You will need to register with the HMRC in order to use MOSS.
This does not apply to print products which are posted to your customers or other products which require manual intervention and will not affect arrangements for customers based in the UK, but will need to be considered if you do sell images via download from your account.
If you need to find out further information, please speak to your accountant to check the implications for you and whether any action needs to be taken, or visit the HMRC site for extra guidance.
We will not make any changes to your products or prices, so if you decide to stop offering downloadable files for sale to avoid this change, that would be your decision. You may feel that the majority of your orders for downloadable files are not sold to consumers in the EU, and consequently it would be better to continue to offer these to all customers and continue to capture sales for your work and just allow for these EU orders as and when the situation arises.
Just as a reminder, we already capture the billing and delivery address for all customers, so you will already have access to these details in your account for every order. For all customers that use our merchant account, further details regarding the shopper IP address and country will also be accessible for your orders from now on.
Additional details regarding accessing this extra information if you need it will be included with your invoice emails from next month onwards.