A number of online firms are under threat from new EU rules that surround VAT and it could cause a number of problems for these firms. The new rules will mean that many more businesses will now have to use the services of an accountant to ensure that they now adhere to this new, intricate tax system.
The new rules make it slightly more difficult for businesses to sell and they muddy the waters some what but if your business sells digital products then it is vital that the new EU VAT system is followed. This new law requires businesses to charge VAT on products sold depending on where the customer lives. The idea behind this new law is to stop firms from undercutting rivals through setting up a business in those countries that have low tax like Luxembourg.
There is every possibility that the new EU tax law could result in a high number of businesses ceasing trading. Any business that sells digital products will be affected and this ranges from e-books to pictures to music but ultimately the best thing businesses can do is hire an accountant to ensure that all paperwork and laws are followed.
However, it has been acknowledged that this new law is going to put a strain on businesses which is why the HMRC has introduces a new scheme. This is known as the VAT Mini One Stop Shop or VAT MOSS. This enables businesses to make VAT return on a quarterly basis as opposed to registering for VAT separately in all of the EU member states. This will make it more efficient and a lot easier for businesses to keep on top of their VAT giving them a clearer picture of exactly what they need to do.