There are special rules for digital services and in this question our client was asking about providing online training to overseas customers.
The first thing to confirm is if there is a ‘live element’ to the service:
- Educational training or similar, delivered by a person over the internet or electronic network (such as a webinar), is not considered to be an electronically supplied service because an actual person is involved in the delivery.
- If you are able to provide a ‘live element’, such as a 24 hour helpline that will be answered if you have any questions at any time, then you do not need to consider the digital services aspect of your service. There is no requirement to have a certain % of ‘live’ to pre-recorded input.
If the answer to the above question is ‘yes’, then consider who your customer is:
- Are they a business? – in which case you do not need to charge VAT to your overseas customer (but you do need to account for this sale in box 6 of your VAT return).
- Are they an individual? – in which case you would need to standard rate your invoice.
If the answer to the ‘live element’ question is ‘no’ and you determine you are offering a digital service there are a few more considerations:
Is your customer a business? – in which case you can do not need to charge VAT to your overseas customer (but you do need to account for this sale in box 6 of your VAT return).
If they are an individual, then –
- Are they based in the EU? – if so, charge VAT as required in that country, and complete a MOSS Return once you have registered in an EU country (MOSS = Mini One Stop Shop Scheme)
- Are they outside the EU? – if so, you do not need to charge VAT to your overseas customer (but you do need to account for this sale in box 6 of your VAT return).
If you are concerned about what VAT rates you should be charging or paying for services, please ask us.