What is VAT MOSS?

 
 

What is VAT MOSS?

The VAT Mini One Stop Shop (VAT MOSS) scheme enables you to pay VAT in the UK if your business supplies certain digital services to consumers in other countries within the EU. It was introduced so that UK sellers, and businesses outside the EU, could just register and pay VAT to HMRC, instead of having to register for VAT in up to 27 other member states.

The Digital Services covered under VAT MOSS are:

  • Telecommunication services

  • Radio and TV broadcasting services

  • Electronically supplied services.

Do I need to register for VAT MOSS?

Under the EU VAT regulations the place of supply of digital services is in the country in which the customer is based. A business not using VAT MOSS would therefore be required to register for VAT in every EU country that they sell digital services to. Most business will only be registered for VAT in the country of their origin, therefore the requirement to VAT register in every EU country that they sell to is extremely onerous.

This is where VAT MOSS comes in, instead of registering in each country a business can choose to register for VAT MOSS in one EU country and declare the VAT on EU sales of digital services on one return.  

What is the VAT threshold for VAT MOSS?

Unlike the normal UK VAT regulations there is currently no threshold of turnover that a business needs to reach. From the first sale to another EU country of digital services the business is required to register. You must register for VAT MOSS by the 10th day of the month after your first digital service sale.

These rules will be relaxed, from 1 January 2019, to assist smaller businesses. Where the supplier has a fixed or business establishment in only one EU country:

  • The place of supply will revert back to where the supplier belongs if the following conditions are met:

    o    The consumer resides in a different member state to the supplier, and

    o    The total value of supplies to those consumers residing in other Member States is less than €10,000 in the current and previous calendar year.

  • If the €10,000 threshold is crossed during the calendar year, the place of supply rules will change from that date onwards and for the following calendar year.

  • Businesses can opt to apply the current place of supply rules and ignore the €10,000 threshold.

How do I register for VAT MOSS?

To register for the VAT MOSS scheme UK business are first required to register for VAT and then to VAT MOSS. If the business is ordinarily below the UK VAT threshold they are not required to charge VAT on all their UK sales or reclaim VAT on all expenses, but can choose to if they wish. Instead they can submit nil VAT returns, until such point that the taxable turnover exceeds the VAT registration limited (currently £85,000).

How will Brexit affect VAT MOSS?

These rules are not just for businesses within the EU but for all businesses selling digital services to EU consumers. There is therefore a Union VAT Moss scheme for businesses within the EU and a Non-Union VAT MOSS scheme for businesses outside the UK. As we are currently within the EU, UK business are required to register for the Union VAT MOSS Scheme. Depending on what happens with Brexit, these requirements could change however let’s see what happens with the Custom’s Union.

What does the VAT MOSS scheme require from me once I am registered?
Once you are a part of the VAT MOSS scheme, you are required to submit quarterly returns in line with the calendar quarters. These need to be submitted and the VAT liability paid 20 days after the period end.

For more information and details on how to register for the VAT MOSS scheme visit: https://www.gov.uk/guidance/register-and-use-the-vat-mini-one-stop-shop

Further reading on regulations on what is included can be found here: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:077:0001:0022:EN:PDF