VQOTW: VAT position on supplies of digital services

 The daughter of one of my long-standing clients was referred to me for some advice and I have just accepted her as a client.  She develops apps and is considering the best way to sell them.  For access to the widest potential customer base, she can sell via a platform, or she can set up her own website to allow people to download direct from her. I expect that she will opt for selling on a platform but what are the VAT implications?  These apps relate to online gaming and are designed for individual gamers not businesses.

Apps fall into the definition of electronically supplied digital services where they have already been developed and are being sold without significant human intervention, e.g. downloaded.  Other common digital services are music and video downloads, pre-recorded training courses and stock photographic images.

Live streamed events and performances are not digital services for the purpose of applying these rules. Depending on the content these could be treated as supplied where the supplier belongs or where the customer belongs.

The place of supply of electronically supplied digital services is where the customer belongs, whether that is a business (B-B) or a consumer (B-C).

If your client sells apps directly to customers (B-C) she will be required to establish where each customer belongs and account for VAT at the appropriate rate in each member state where this is in the EU.  This can be done by registering for the non-Union VAT OSS (one stop shop) in an EU member state and accounting for EU VAT on the calendar quarterly OSS return. Guidance on OSS returns can be found in the link below:


Where a platform is involved in the supply, it simplifies the VAT for your client significantly as the supply is treated as being to and by the platform; the supply to the platform being a B-B supply. B-B digital services are supplied where the business customer belongs and most of these platforms are established outside the UK. If she sells through a non-UK platform, her B-B supply will be outside the scope of UK VAT.  It is then the responsibility of the platform to account for VAT correctly on the B-C supply in the consumer’s member state, including the UK. Further guidance on electronic services, including information on digital portals, platforms, gateways and marketplaces can be found below:


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Senior VAT Consultant
0844 892 2470

Viv has worked in VAT since 1989, when she joined HMRC as an Assurance Officer. Before joining the team as a consultant in 2000, she had spent five years dealing with written and telephone enquiries at a local VAT office.

In 2007/ 2008, she spent a year with a major accountancy firm gaining experience of VAT from a different perspective and developing skills which are relevant to her current role.

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