Eire-exit! Firms urged to Ireland in VAT chaos
BUSINESS advisers are encouraging firms to register in Ireland in case Revenue and Customs loses its system that simplifies VAT returns following the Brexit vote.
Their fears stem from EU digital VAT rules, which came into force early last year. They were designed to stop consumer tax being lost due to multinationals setting up in lowtax countries.
But they are hitting small traders, such as those selling ebooks, screensavers and website advertising space.
One business adviser, who works with start-ups across Europe, said ‘I’m advising clients to register businesses in Ireland. In fact, I really wish I was working for the Irish Development Agency right now.
‘This way they can launch now, reducing the two years-plus of uncertainty, and then try to work out how to respond to the new rules.’
Meanwhile, EU VAT Action, a campaign group set up to support small firms and individual traders selling anything downloadable or used online in the EU, has said they need to make sure ‘more than ever’ that they can prove where their customers are.
The rules mean sellers have to charge VAT in any EU buyer’s country, at that country’s VAT rate, even if the seller is not in the EU – which means the rules will still apply post-Brexit.
There are fears that postBrexit, the Revenue would lose its VAT MOSS portal, where sellers can submit VAT returns and payments for 27 countries in one go, via one website, instead of registering for VAT in every EU member state, in their language, with their rules.
EU VAT Action has warned: ‘Our simplest option would be to register for the Irish VAT MOSS system, because it’s in English, but that would mean doing returns in euros, not sterling, and risking countries pursuing you for rounding errors.’
Clare Josa and Juliet McKenna of EU VAT Action met Treasury officials on Thursday to discuss the next steps following the referendum. Josa said after the meeting: ‘The UK will continue to have a say as this legislation is developed and implemented. Once Article 50 is invoked, the weight given to that voice may change.
‘Whatever the outcome of Brexit, having to pay VAT based on a customer’s location is the way that more countries are going. More than ever, you need to make sure you can show where customers are.’
Rich Mellor, founder of website sellmyretro, which deals in vintage computers and software, said: ‘The UK was campaigning for a threshold below which EU digital VAT would not be charged, but that campaign is now likely to fall on deaf ears within the EU as they always saw the micro-business issue as a UK problem.’
The Office of the Revenue Commissioners in Ireland said: ‘New entrants to the EU market are likely to be looking towards Ireland for MOSS registration. Once the UK leaves the EU, businesses there will not have access to the EU MOSS scheme through the UK so it is likely registration in Ireland would then be an attractive option.’