VAT MOSS: The Facts

Friday 30 September 2016

VAT MOSS stands for VAT Mini One Stop Shop, which is a law regarding the sale of some digital service to consumers outside the European Union (EU.)

If you sell a digital service to consumers in the EU, you have to charge at the local VAT rate depending on where the customer is located.

The VAT MOSS law came into effect from the 1st January 2015 and it covers the sales of digital services including broadcasting, telecommunications and e-services. The rate of taxation is determined by the location of the consumer.

The aim of the changes in the law relating to VAT was to create a “level playing field” for UK businesses by removing the current competitive advantage of EU member states with lower rates of VAT, as stated by the gov.uk website.

You can check if this affects your business by using the VAT MOSS flowchart on the gov.uk website. If you run a VAT-registered digital business in the UK, charge for its services, have customers in other EU member states and you don’t sell your services via a third-party platform or a marketplace, then VAT MOSS applies to your business, or alternatively you can register for VAT in the member states where you have non-business customers.

However, as a result of June’s Brexit result, it is unclear how VAT MOSS will operate in the future. The VAT MOSS only applies to digital businesses based in the UK. As the UK has decided to leave the EU, the UK will not be a part of the EU’s VAT system and will not be able to benefit from this. UK businesses may be required to register for VAT in various EU jurisdictions. The so-called “level-playing field” between the UK and EU countries will cease to exist.

In the meantime, while Britain starts to enter the process of Brexit, you can receive support, guidance and assistance on VAT MOSS and other legal aspects of running a business if you are based in the UK.

Sources:

http://www.icaew.com/en/technical/tax/working-with-hmrc/vat-moss

https://www.gov.uk/government/collections/vat-moss-vat-on-sales-of-digital-services-in-the-e

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/415931/VAT_MOSS_Flow_chart_FSB_edit_V1_0.pdf

https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

https://www.gov.uk/guidance/register-and-use-the-vat-mini-one-stop-shop

http://www.lexology.com/library/detail.aspx?g=c3bd6fc2-7e84-4c20-a102-648f39f097da


By Victoria McDonnell

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