Guidance from HMRC:
VAT: businesses supplying digital services to private consumers
Note that the new rules apply only where a UK business meets all the following criteria:
- supplies digital services from the UK to another EU member state (goods and non-digital services sold over the internet are not within scope)
- supplies those services to a private consumer in another EU member state (business to business sales are not within scope)
- charges for that supply (digital services provided free of charge are outside the scope of VAT)
I sell PDF patterns, printables or graphics on Folksy. Are these digital services?
Why isn't Folksy handling the VAT for me?
The HMRC have produced a flowchart which indicates that the new rules do not apply to individual sellers when selling through marketplaces. This is because on many marketplaces, the sales contract is between the buyer and the marketplace, unlike on on Folksy where the transaction is directly between you and your buyer. After reviewing how the Folksy platform currently operates, HMRC does not consider that our platform is responsible for accounting for the VAT on business to consumer supplies of digital services.
I am affected by VAT MOSS. Is Folksy doing anything to help me comply?
- Read our full update and response from HMRC here: VAT MOSS update - part two
- HMRC has published a Revenue and Customs Brief giving some guidance on this and also published some revised guidance which you can find here.