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Legal Terms - digital services
In recent years, the UK government, like to other governments, has endeavored to impose taxes on online business activities. The Finance Act 2020, sections 39–72, establishes a new tax on "digital services," defined as (a) a social media service, (b) an internet search engine, or (c) an online marketplace. The Digital Services Tax is a levy on UK digital services income (not profit), effective from 1 April 2020, at a rate of 2% on yearly revenue exceeding £25 million. A formula exists to ascertain the portion of a company's revenue, derived from foreign operations, that qualifies as "UK digital services revenue."
This is supplementary to UK VAT, imposed on the provision of goods or services within the UK (Value Added Tax Act 1994 § 4). The Finance Act 2018 conferred upon HM Revenue and Customs enhanced authority to collect VAT on supplies made via a "online marketplace," defined as "a website ... by“The information that is made accessible ... through which individuals ... can provide goods for sale” (see to VAT Act 1994 s 77B and sch 1A). The concept of "supply in the UK" is thoroughly examined concerning a Dutch firm delivering goods to UK clients in Healthspan Ltd v R & C Commrs [2018] UKFTT 241 (TC). The Court of Appeal examined the VAT obligations of the online booking services offered by lastminute.com and Holiday Autos in Secret Hotels2 Ltd v R & C Commrs [2012] EWCA Civ 1571, determining that the services are subject to UK VAT, despite the hotels and cars being located outside the UK.
In recent years, the UK government, like to other governments, has endeavored to impose taxes on online business activities. The Finance Act 2020, sections 39–72, establishes a new tax on "digital services," defined as (a) a social media service, (b) an internet search engine, or (c) an online marketplace. The Digital Services Tax is a levy on UK digital services income (not profit), effective from 1 April 2020, at a rate of 2% on yearly revenue exceeding £25 million. A formula exists to ascertain the portion of a company's revenue, derived from foreign operations, that qualifies as "UK digital services revenue."
This is supplementary to UK VAT, imposed on the provision of goods or services within the UK (Value Added Tax Act 1994 § 4). The Finance Act 2018 conferred upon HM Revenue and Customs enhanced authority to collect VAT on supplies made via a "online marketplace," defined as "a website ... by“The information that is made accessible ... through which individuals ... can provide goods for sale” (see to VAT Act 1994 s 77B and sch 1A). The concept of "supply in the UK" is thoroughly examined concerning a Dutch firm delivering goods to UK clients in Healthspan Ltd v R & C Commrs [2018] UKFTT 241 (TC). The Court of Appeal examined the VAT obligations of the online booking services offered by lastminute.com and Holiday Autos in Secret Hotels2 Ltd v R & C Commrs [2012] EWCA Civ 1571, determining that the services are subject to UK VAT, despite the hotels and cars being located outside the UK.
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