What is MOSS?
MOSS is a simplification measure available to businesses supplying digital services throughout the EU, it allows them to register and pay VAT to just one Tax Authority (e.g. HMRC), rather than having to register for VAT and make payments in the each of the EU member states in which they make sales.
For example, if digital sales are made by a business to England, France, Germany and Spain, when using the MOSS system, they would be required to be registered for VAT only in one EU member state and prepare only one VAT return, detailing the sales in each country on that return.
The scope of digital services is broadly where the service is delivered over an electronic network (e.g. the internet) where is there is minimal or no human intervention.
Some examples of this are:
- Live streaming, if broadcast at the same time as transmission by radio/TV.
- Access to the internet
- Supplies of e-books
- Supplies of music, films and games online
- Online software
Some practical examples are paid apps from an app store and streaming services (e.g. Netflix).
What action needs to be taken in respect of Brexit?
Depending on the outcome of Brexit, if you are currently using the MOSS system you may need to register with the ‘non-union’ scheme in another EU member state to continue to benefit from the simplification.
You would need to register by the 10th day of the month following their first sale after the UK leaves the EU.
However, UK businesses will only be able to register for MOSS in another EU member state after the UK leaves the EU.
If any non-UK businesses (e.g. US businesses supplying EU customers) currently use the scheme and are registered for it in the UK, they will need to register for the scheme in another EU member state. They may well then require a separate traditional VAT registration in the UK.
One point to note is that when the UK leaves the EU, all supplies of digital services to customers in EU member states become liable for VAT in the consumer’s member state. The £8,818 annual threshold for cross border sales of digital services to EU consumers will no longer apply.
Businesses will have to charge VAT at the rate where their customer is based and declare those sales to the relevant EU member state. To declare the VAT charge, you can register for VAT in each EU member state where sales are made or register for the VAT MOSS ‘non-union’ scheme in an EU member state.
The MOSS system can provide a significant reduction in administration and compliance requirements where appropriate. If you would like to consider it for your business, especially if you sell digital services, please get in touch to see how we can help.