Yes, royalties are normally subject to VAT, but the VAT treatment depends on your circumstances. EmuBands act as a principal for VAT purposes, and the place of supply for all royalties is the United Kingdom.
Your circumstances should fall into one of these three scenarios:
1. If you are in the UK, and are registered for VAT:
VAT is applicable at Standard Rate of 20% and will be added to your self-billing invoices, subject to you having a valid self-billing agreement in place. It should be noted that any VAT disclosed on the self-billing invoice is YOUR VAT to account for, to the UK Tax Authorities (“HMRC”) via your VAT return which you are to complete.
2. If you are in the UK, but are NOT registered for VAT:
VAT is not applicable on your royalties from EmuBands.
3. If you are outside the UK
EmuBands will account for VAT to the UK Tax Authorities (“HMRC”) via the Reverse Charge Procedure. This procedure applies when:
– You are in an EU Member State and are registered for VAT
– You are in an EU Member State but are not registered for VAT
– You are outside of the UK and the European Union
VAT can be a complex and confusing area of tax, and should you require any specialist advice relating to your circumstances we are happy to recommend (to UK residents) The VAT Helpline Ltd (https://thevathelpline.com).
Disclaimer: This information is true as at and from 1st January 2021 onwards. Do not take any advice given here as official legal, tax or accountancy advice. Always consult a qualified expert in your own tax jurisdiction for proper advice.