The UK is on the way out of the Single Market but they may still have to adhere to certain EC regulations. This week the EC followed up its action plan to extend the VAT one-stop-shop to include online sale of goods and services.
The ultimate aim is that tax will be collected in the state of the consumer. It will take a number of years to implement and ratify but it indicates where the EC is heading and where the UK may need to follow.
As part of the announcement the EC also seek to level the playing field between e-books, e-newspapers and printed matter. Traditionally in the UK, an electronic version of printed matter has been taxed at a 20% higher rate that its more traditional hard copy.
Once ratified, the new rules will allow, but not oblige, member states to apply the 0% to the e-versions. These changes take a while to filter through and the UK may have left the single market before we see any changes. Nevertheless, pressure will be on the UK government to fall into line when the change happens, so watch this space.
If you would like to discuss any of the above or you have other VAT issues, please contact our VAT specialist, Nigel Smith on firstname.lastname@example.org.