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HMRC internal manual

VAT Place of Supply of Services

Electronically supplied services (special scheme): Overview

The special scheme for electronically supplied services provides an optional, simplified means for non-EC businesses supplying electronically supplied services to EC non-business customers of registering and accounting electronically for EC VAT. The Special Scheme offers eligible non-EC businesses the option of registering electronically in a single Member State of their choice and accounting for VAT on their sales of electronically supplied services to all EC non- business consumers on a single quarterly electronic VAT declaration which provides details of VAT due in each Member State. This is submitted with payment to the tax administration in the Member State of registration which then distributes the VAT to the Member States where the services are consumed.

For example, a USA business registers for the Special Scheme in the UK. Its customers are located in the UK, Italy and Spain. The USA business charges UK VAT to its UK customers, Italian VAT to its Italian customers and Spanish VAT to its Spanish customers. The business enters the VAT for each country on the appropriate line of the electronic declaration. It sends the declaration electronically with payment to HMRC, who retain the UK VAT and pass on the Italian VAT to the Italian authorities and the Spanish VAT to the Spanish authorities.

Full details of this scheme can be found in Notice 741A Place of supply of services.

2015 Changes

The VAT Package includes changes to the place of supply rules for broadcasting and telecommunication services. These are to be introduced on 1 January 2015. At this time, supplies of broadcasting and telecommunication services to non-business customers will be supplied where the customer belongs. When these rules come into effect, the VOES scheme will be widened to include these services.