Electronically supplied services (ESS) - rules applicable before 1 January 2015

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Electronically supplied services (ESS) - rules applicable before 1 January 2015
  • What are ESS?
  • Identifying where the customer belongs
  • VAT treatment of ESS
  • UK VAT treatment of ESS by UK businesses
  • UK VAT treatment of ESS by non-UK EU businesses
  • UK VAT treatment of ESS by non-EU businesses

This guidance note provides an overview of the rules that are applicable before 1 January 2015.

VATPOSS16100; VAT (Place of Supply of Services) Order 1992 SI 1992/3121, Articles 16A, 17(b) and 18(b) (subscription sensitive); De Voil V16.875A (subscription sensitive); HMRC Notice 741A 

The VAT treatment of ESS supplies depends on the location of the supplier and the location and business status of the customer. This guidance note provides an overview of the VAT treatment of ESS supplies within the EU. If a non-EU business is supplying ESS to EU private customers then it may need to register for VAT under the special ESS VAT registration scheme. Please see the VAT registration under the ESS EU special scheme for non-EU businesses guidance note for more information.

What are ESS?

ESS include any service that is delivered over the internet or via some other electronic network and the nature of the particular service is that it is mainly dependant on the internet or electronic network as the delivery mechanism for the provision of the service. The services supplied must be predominately automated and have very limited human intervention, and the services must not be able to be provided without using the internet or other electronic network.

VATA 1994, Sch 4A, para 16(2)(k)

The following are typical examples of the types of services that are deemed to be ESS for VAT purposes:

  • supplies of web hosting or the provision of websites
  • remote maintenance of programmes and equipment
  • supplies of software and upgrades
  • supplies of images, text and information and making databases available
  • supplies of digital music, films, games, and broadcasts of any description (ie political, educational or entertainment)
  • e-auction and e-trading companies (the company receives fees for listing and

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