A new online service – the VAT Mini One Stop Shop – is designed to help suppliers of digital services in Europe cope with new compliance rules. By opting to use VAT MOSS, businesses can make VAT declarations and payments for their EU supplies of digital services, to a single elected member state on a calendar quarterly return.
From January, under new EU-wide rules, the place of supply of e-services – such as music/game downloads, e-books, online streaming of music and videos, and internet telephone services – will shift to the customer’s country. The rate of VAT charged on these services will be based on the rate applicable in the customer’s country. If you supply such digital services, you can opt to use the VAT Mini One Stop Shop online service (VAT MOSS) to record that and to account for any VAT due. This will be effective from 1 January 2015, though you can register to use it from October 2014.
''The MOSS is not obligatory and suppliers can still decide to register and account for VAT in all member states where they have customers,'' says VAT partner Scott Craig
. ''However, with 28 EU members and varying VAT rates and rules, the MOSS appears to offer a simpler way of accounting for VAT in multiple states.'' Note that the MOSS only applies to supplies that are made to non-business customers. ''It provides a single VAT return, that is submitted in the member state where the supplier belongs or chooses to register to report and pay the VAT due on digital supplies,'' Scott explains.
Under the new rules, a business that supplies digital services to EU consumers could have a liability to account for VAT in every EU member state it makes supplies of digital services. ''Using the MOSS you can submit a calendar quarterly MOSS return and payment for all your EU digital service supplies,'' Scott says. ''If you register for the VAT MOSS online service in the UK, you will be able to account for the VAT due on the digital services you supply to consumers in all other member states. HMRC will send the appropriate part of your VAT MOSS return along with any VAT payment to the relevant member state’s tax authority on your behalf.'' The VAT rate used in other member states is the rate in force at the time the service was supplied.
Non-EU businesses that supply digital services to EU customers who have a fixed establishment in the EU, can register and to use the ‘Union’ VAT MOSS online service. Such businesses normally choose to register in a member state in which they have a fixed establishment.
The VAT changes to the place of supply rules for e-services, broadcasting and telecommunications are effective from 1 January 2015. ''If you are affected, now is the time to plan for MOSS,'' Scott says. ''Given the software and administrative requirements of charging VAT at multiple rates, and getting to grips with multiple jurisdiction VAT registrations or MOSS accounting, January isn’t far away.''
Please call our specialist VAT team if you have any questions or need assistance. We can also review your situation and help to implement the most cost-effective and practical VAT accounting system.
ContactsMSUK VAT Group
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