As per the EU VAT rules, if any individual, partnership or company supplies taxable goods and services, they can become VAT registered.
Here are few examples of products and services that fall into taxable supplies -
- Sale of new and used goods.
- Hiring out or renting goods.
- Offering a service, for instance, interior decoration, graphic design, lettering e.t.c
- Admission fees for exhibitions and events.
As of now, the VAT registration is done in the seller’s respective EU country and there’s no need to register elsewhere even if sales are made to consumers in other EU member states.
Though, businesses with revenues less than the VAT turnover threshold for their country will not be required to charge VAT on their sales and it’s not mandatory for them to register.
Earlier, there was a set turnover threshold in each EU country. If a business did revenues that were below the threshold, they were not required to register for VAT.
But at present, there is no threshold for registration if a business sells into other EU countries.
For instance, if a UK based business sells a product worth 1 EUR in an Spain, they’ll have to register for VAT in that country, even if their net turnover is below UK’s exemption threshold of 81,000 GBP.
If a business sells e-services only in the UK or to non-EU countries, VAT registration will not be required until the revenues reach the threshold.
In a recent update, UK's revenue authority has amended the MOSS for small businesses in the UK. As per the HMRC brief 46, businesses will be needed to locally register for VAT, in order to use MOSS and still enjoy the benefit of the threshold for sales made within the UK.