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UK VAT-registered company considering selling apps/games online (things like Apple App Store, Google Play Store, Microsoft Windows Store, Steam) and also earning via affiliate programs like Amazon Associates.

For all of the stores, sales to the consumers may include VAT. For affiliate fees, the sales that earned the fees may have included VAT.

Normally the UK company would include VAT on an invoice for services, however this is not possible for any of the above. Their terms generally state that VAT should not be charged.

Examples:

  • Microsoft Developer agreement: "If you are in a country that recognizes a sale to Microsoft as a taxable supply for VAT/GST purposes, that supply is deemed to be made to Microsoft exclusive of VAT." Tax details: For EU and US, the table states that the tax responsibility is Microsofts.
  • Amazon Associates UK: "If you are an EU resident taxable person established outside Luxembourg you are not required to charge VAT to Amazon Europe Core Sarl. Instead Amazon Europe Core Sarl accounts for the VAT due on this supply under the reverse charge mechanism."
  • Google AdSense: "In accordance with the terms of your agreement with Google, the services provided are subject to the reverse charge mechanism and so VAT is to be accounted for by the recipient, Google Ireland, per Article 196 of Council Directive 2006/112/EC."
  • Google Play Store: "Google will send VAT for EU customers' digital content purchases to the appropriate authority. You don't need to calculate and send VAT separately for EU customers."

For some of these (eg. Amazon) it seems clear that the company can generate an invoice and mark it with Amazon's VAT registration number and that VAT should be paid by Amazon under the reverse-charge mechanism. For others (eg. Microsoft, Google Play Store) it seems clear that VAT should not be charged, but it's not clear whether it should be handled in the same way (for example no VAT registration number is listed or mention of the reverse-charge scheme).

  1. What's the correct way to account for these?
  2. If the UK company is on the flat-rate VAT scheme, would this result in paying VAT on the value of the invoices (even though it wasn't charged and had already been paid by the other company)?
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    When supplying to a business in a (different) EU country, VAT is never charged but always handled by reverse charge. This is meant by the Microsoft, Amazon, and AdSense quotes. When supplying digital goods to consumers in a different EU country, you would usually handle VAT via the MOSS scheme (or have to register separately in each country). But since the Play Store performs the B2C transaction they handle MOSS, and you perform a B2B supply to the Play Store.
    – amon
    May 3, 2020 at 7:13

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