VAT “Mini One Stop Shop” (MOSS)

There is a very important change coming into force in respect of the VAT place of supply rules where a business supplies E-services to non-business consumers.

 

What are E-services?

Very simply, E-services are electronically supplied services such as:

·         Broadcasting

·         Telecommunications

·         Sale of applications

·         Electronic books

·         Online gaming

·         Downloaded computer software

·         Music downloads

 

What is the change?

 Starting from 1 January 2015, where a business sells E-services to private individuals within the EU, it may be required to register in each of the member states where it has a customer and charge the appropriate rate of VAT. This is because the place of supply will be where the customer belongs instead of the current rule of where the supplier belongs.

 If you sell to one or two EU countries, then this may be straightforward, however if this is not the case, registering with the VAT authorities in many EU countries may be painstaking.

 To avoid this, HMRC have set up the VAT mini one stop shop (MOSS), which means that  a business only needs to be registered in one EU member state with the requirement to complete and submit only one VAT return.  This avoids the need to be registered in all the EU member states.

 

Do I need to complete returns? How do I pay?

 Once registered for MOSS, the business must complete one MOSS quarterly VAT return showing the value of sales to private customers in all EU member states. Any sales made in the UK should be reported on your normal VAT return.

 The total VAT payment must be made to the tax authority in the member state of registration (in the UK’s case – HMRC) and that tax authority will pay over the VAT owing to the individual member states.

 

What if my UK turnover is below the VAT registration threshold?

 You will still be required to use MOSS to account for the VAT due in other EU member states.

 You will need to apply for a UK VAT registration but do not need to charge or account for VAT on sales to UK customers as long as your UK turnover remains below the threshold.

 As you will not be charging VAT on your UK sales, any VAT reclaimed must be attributable to the cross-border E-services supplied.

 HMRC Example

 You buy a computer which you use to make all of your sales. If 60% of your sales are UK sales, and 40% of your sales are to consumers in other EU member states, you can recover 40% of the VAT charged on the purchase of the computer if the computer is only used for business purposes.

 

I am affected by the change in rules. How should I proceed?

 The UK tax authority of HM Revenue and Customs (HMRC) is well prepared for this new VAT regime and registration for MOSS has been available since 20 October 2014. Once a business has registered (this must be done by the business itself), it may then authorise us to deal with on-line submissions.

 If you are affected by the changes or would like to discuss this in more detail, please call us.