Brexit Update: Good News For Software Licence Resellers

Posted on May 6, 2021July 15, 2022 by philhdiscountl

Brexit Update: Good News For Software Licence Resellers

The UK officially withdrew from the European Union (EU) on 31st December 2020, triggering a vast array of tax and tariff changes across almost every industry. In the secondary software market, Brexit has caused a little confusion amongst resellers as to whether they face hidden shipping or tax costs. In this article, we’ve put together a helpful overview of the facts.

Q: Will UK-based secondary software suppliers face any hidden costs when invoicing EU customers, or vice versa?

A: No. If both entities are VAT registered, nothing will change. Businesses should continue to treat software licencing as a kind of service, placing it outside the remit of value-added tax (VAT).

For example, if you’re a UK-based supplier of used licences and want to invoice a German, Spanish, or French client, your invoice document should be issued without any VAT added.

Q: Will secondary software suppliers based in the EU face any hidden costs when invoicing business customers in other EU member states?

A: Again, the answer is no. Let’s say, for example, a secondary software supplier owns an entity based in a member state of the EU such as Spain and resells pre-owned licences to a client in another member state such as Germany. The location of supply is where the business will be considered an established entity. In this way, no VAT will need to be added to the sales invoice from the Spanish supplier to the German client.

It is worth noting, however, that the sale must still be recorded on a local EC Sales List and the business customer’s VAT number must be visible on the invoice issued by the Spanish supplier. The invoice legend must also state that the service is subject to reverse charge mechanisms.

Q: Should EU or UK-based suppliers charge VAT when invoicing business customers in the same country?

A: In both cases, suppliers must add VAT in accordance with local guidelines, regardless of the business status of the client.

The Bottom Line

The UK’s withdrawal from the EU on 31st December 2020 has not caused any serious taxation, tariff, or shipping issues for used software suppliers. This is great news for those who were worried about the transition and demonstrates that the pre-owned software industry has so far escaped relatively unscathed from the economic upheaval caused by Brexit.

For more information on buying or selling pre-owned software licences, get in touch with the team at Discount-Licensing today.

Image source: Pixabay

Discount Licensing BREXIT Statement 2021

Posted on January 7, 2021July 15, 2022 by philhdiscountl

Discount Licensing BREXIT Statement 2021

Dear Client,

On the 31st December 2020, the United Kingdom (UK) formally left the European Union (EU). A withdrawal agreement (‘Treaty’) was agreed and the following summarises the key facts concerning how that Treaty affects the trade of pre-owned software transactions between the UK and the EU:

1) The Treaty has no historical impact on previous pre-owned software transactions made between the UK and the EU, on or before the 31st December 2020;

2) The Brexit Treaty does not retrospectively have any impact on pre-owned software licences originally ‘put into use’ in the UK on or before the 31st December 2020. Therefore, software licences first ‘put into use’, on or before the 31st December 2020, can still continue to be resold to the EU, on or after the 1st January 2021;

3) Software licences that are first ‘put into use’ in the EU, on or after the 1st January 2021, can still be resold to the UK. During 2020, the UK Government enshrined in law that it will continue to recognise the ‘Exhaustion of Rights’ principle, whereby pre-owned software originally ‘put into use’ within the EU, can flow freely from the EU to the UK:

“Intellectual property rights which were exhausted both in the Union (EU) and in the United Kingdom before the end of the transition period under the conditions provided for by Union law shall remain exhausted both in the Union (EU) and in the United Kingdom” : Article 61 of the “Transition Agreement” [Treaty Series No. 3 (2020) Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community].

4) Whilst a Treaty was agreed, it did not specifically address the trade of pre-owned software ongoing. Therefore, software licences that are first ‘put into use’ in the UK, on or after the 1st January 2021, cannot subsequently be resold to the EU; such software can only be resold to UK clients.

Discount-Licensing warrants that it will only resell pre-owned software to EU clients with software in compliance with UK and EU guidelines, as summarised above. Whilst it is not a legal requirement in order to maintain trade between the UK-EU, we have decided to open a subsidiary company within the EU in case our EU clients prefer to trade with an EU based ‘Discount-Licensing’ entity. In any case, it is our ongoing commitment to continue trading within the UK and the EU to the same high levels of service that our European clients have come to expect from us.

Should you have any questions, please telephone one of our colleagues on +44 (0)1283 511524 or email: info@discount-licensing.com.

Thank you for your continued support.

Image source: Pixabay

Microsoft Sues Another Rogue Software Licence Vendor

Posted on September 22, 2020July 15, 2022 by philhdiscountl

Microsoft Sues Another Rogue Software Licence Vendor

Discount Licensing are pleased to see that Microsoft are continuing to take action against rogue vendors.

In October 2019, Microsoft announced that it would be suing the German company Lizengo for illegally selling Windows and Office licence keys at heavily discounted prices. The keys, which were sold as gift cards through the popular German supermarket chain Edeka, came under suspicion when customers began querying their suspiciously low prices.

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Although Lizengo claimed that the keys were new and legal, the PIDs (Microsoft Product Identifiers) suggested otherwise. It turned out that many of the keys had been released only to the Chinese market, making them illegal to sell in Europe. Other keys were found to be the result of leaked licences from academic institutions, meaning that they could be activated by up to 30 separate users.This is further proof of the widespread nature of licence key fraud and shows just how careful you need to be when purchasing a Microsoft licence. It is worth remembering that Microsoft licence prices tend to be fairly rigid, and if a deal for new licensing seems too good to be true, it probably is. Many people wrongly assume that buying an activation key is the same as buying a licence (the right to use the software), but this is a mistake. Owning a genuine activation key does not automatically mean that you own the licence, thus entitling you to use the software.

For a business, Microsoft has the right to audit you at any time to check the legality of your licences. The financial penalties can be severe, as well as the reputational damage from the negative press (software manufacturers want it known that they will take action so as to discourage others from being non-compliant). In this case, by not doing proper due diligence, the supermarket has potentially exposed themselves to action from the software manufacturer, so it pays to background check any low cost licences, especially if they are being resold. No doubt as part of any settlement, the resellers will need to provide a list of customers who have bought the software as this presents a sales opportunity for the manufacturer. Look out for red flags apart from below market prices such as the absence of a postal address or working phone number. If a company is impossible to contact, it usually means that they have something to hide.

With so much fraud around, you need a licenced seller that you can trust. At Discount Licensing, we perform thorough background checks on all licences we supply to make sure that they are legitimate.

At Discount-Licensing, we specialist in Microsoft Volume Licensing, and the software manufacturer (in this case, Microsoft) records all of their sales. This makes it very easy for us to check the validity of a software licence on the market. All of our licences are 100% legal and fully auditable, so you can rest assured that you won’t find yourself in trouble further down the line when you purchase secondary software licences from us. We also carry robust professional indemnity insurance to give further protection to our customers.

If you have any questions about pre-owned software licences, don’t hesitate to get in touch, or take a look at our blog for more tips on avoiding rogue software traders.

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Image Source: Unsplash

Category: News

Category: News