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DST is charged on the Digital Services Revenues that are attributable to UK users. »Ê¹ÚÌåÓýappse revenues are called UK Digital Services revenues in the legislation.

Section 40 contains the rules which determine which revenues are attributable to UK users. This will be the case when the Digital Services revenues fall into one of five cases.

• Cases 1 to 4 apply special rules for certain types of revenue. »Ê¹ÚÌåÓýapp first three cases are specific to online marketplaces and are explained in more detail at DST27000.
• Case 5 is the general rule and will apply where revenues do not fall under any other case. »Ê¹ÚÌåÓýappse other cases consequently have priority.

This page focuses on Cases 4 and 5 which can apply to all digital services activities.

Case 4 � online advertising

Case 4 applies to revenues from online advertising that do not fall under Cases 1 to 3.

It sets out that revenues from online advertising will be attributable to UK users when the advertising is viewed or otherwise consumed by a UK user.

»Ê¹ÚÌåÓýapp focus on the viewer of the advertising means that revenues will be UK Digital Services revenues, and chargeable to DST, based on the user viewing the advert. »Ê¹ÚÌåÓýapp location of the business or media agency paying for the advertising is irrelevant.

»Ê¹ÚÌåÓýapp reference to ‘otherwise consumed by a UK userâ€� ensures non-visual advertising like audio advertising is covered by the rule.

Online advertising revenues are defined as revenues from the provision or facilitation of online advertising. »Ê¹ÚÌåÓýapp legislation doesn’t define this any further.

In practice, this means any revenues which are related to showing advertising online to a UK user will be covered by the rule, irrespective of what stage of the advertising value chain the revenues are derived from, or the nature of the online advertising.

Case 5 � the default rule

Case 5 only applies if the revenues do not fall under Cases 1 to 4.

It sets out that revenues are attributable to UK users when they arise in connection with UK users. This is a broad provision which ensures revenues will be UK digital services revenues when there is any connection between the earning of the revenues and a UK user.

In practice, it is most likely to apply when a UK user makes a payment to the provider of the digital services activity. In this case, the revenues will come under Case 5 unless they come within one of the marketplace rules in Cases 1 to 3. »Ê¹ÚÌåÓýapp payments covered by Case 5 will normally include subscription fees, payments to access content or a premium service.

»Ê¹ÚÌåÓýappre may be some circumstances where the revenue arises from the use of the online service by UK users but are not received from UK users. »Ê¹ÚÌåÓýappse will still fall under Case 5 if the revenues arise in connection with UK users. »Ê¹ÚÌåÓýapp group should consider whether the revenues would have been received without the interaction or involvement of UK users.

Revenues attributable to UK users and non-UK users

»Ê¹ÚÌåÓýapp revenues falling under Case 4 and Case 5 will sometimes relate to more than one user. For example, an online advert will normally be shown to multiple users.

This means the revenues could be related to both UK users and non-UK users. In these cases, the legislation requires the revenues to be allocated to UK users on a just and reasonable basis.

It’s important to note the just and reasonable apportionment rules only apply to revenues falling under Case 4 and Case 5. Additionally, they will only apply when:

• Advertising is viewed or consumed by UK users and others
• Revenues arise in connection with UK users and others

Example A

Group A provides a search engine which attracts global advertising campaigns. »Ê¹ÚÌåÓýapp same advertisements will be viewed by UK users and other users throughout the world. »Ê¹ÚÌåÓýapp revenues Group A receives for these advertisements should be apportioned to determine the element arising in connection with UK users in a just and reasonable way.