The VAT MOSS system is designed to help businesses supplying digital services to customers outside the UK and who are based in EU countries.
VAT MOSS – the Mini One Stop Shop enables you to trade easily with European customers and pay the correct VAT on sales charged at the rate of the country of sales, and not at the UK rate where your business is based.
All European countries have different rates of VAT and your business will pay the specific rate of the country you sell in.
VAT MOSS simplifies EU trade
Without the MOSS system you would have to register for EU VAT for each of the countries you trade in. If you trade right across Europe this means registering for VAT in 27 countries. By using VAT MOSS the VAT is automatically calculated at the correct rate of the country of sale.
In France for example the VAT rate is set at 20%. So if you make a sale of £100, £20 will be added to the invoice and then passed on to the French Tax authorities’ impots.gouv Fr.
The exact figure you pay on each sale will depend upon the exchange rate. These are available to see on the Gov.UK website. These should be used if you are VAT MOSS business so that you can complete your declarations and make payments to HMCR in pounds sterling.
You still need to complete UK VAT returns
You will still need to complete your quarterly VAT returns in this country, even if you are not paying UK VAT for many of your sales. You can do this easily by entering zero on your tax return.
Who needs to register for VAT MOSS?
VAT MOSS is a voluntary scheme but it does make European trading much easier for certain types of business.
It only applies to businesses that supply digital services to direct customers such as online services, broadcasting or telecoms. VAT MOSS does not apply to B2B (business to business).
To register for VAT MOSS you need to conform to the following:
- You need to supply digital services to customers in the EU
- You need to be VAT registered in the UK
- You need to be based in the UK.
- If your business is based in the EU, you need to have a physical address in the UK
What happens after BREXIT?
The rules on BREXIT are unclear as yet about how the UK’s withdrawal from the EU will affect VAT MOSS. Once we have received this vital information we will update readers as soon as possible.
To find out whether you should register, contact your tax advisor for advice. In some cases your European sales may not be enough to make this system worthwhile but if you do trade with Europe as a major part of your customer base, signing up is certainly worth it.
If you are looking to learn more about how VAT MOSS could benefit your business, why not book a discovery call?